INFOLINK UNIVERSITY COLLEGE
POST GRADUATE STUDIES
MBA PROGRAM
WORKSHEET ON OPERATIONS MANAGEMENT
Chapter one (Nature of operations management)
1. There are three car manufacturing factories A, B and C, and they are producing the same type
of cars. They are employing 1000, 2000 and 3000 men and producing 10, 15 and 25 cars per
month respectively. Find the labor productivity of each firm and the production of each firm
per year.
2. A manufacturing concern was producing 120 locomotives per year by employing 20,000 men
in the past. To increase production they have now recruited 1,000 men more and as a result
production has increased to 140 locomotives per year. Find:
(i)
What was the labour productivity previously?
(ii)
What is the labour productivity now?
(iii)
What is the percentage increase in production and productivity?
3. ABC Furniture is a small furniture shop that focuses on making kitchen chairs. The weekly Birr
value of its output, including finished goods and work in progress, is Br 14,280. The value of
inputs, such as labor, materials, and capital, is approximately Br 16,528.
a. Compute the total productivity measure for ABC Furniture.
b. ABC has just purchased a new sanding machine that processes 17 chairs in 8 hours.
What is the productivity of the sanding machine?
c. ABC has hired two new workers to paint chairs. They have painted 10 chairs in 4 hours.
What is their labor productivity?
d. On average, ABC produces 35 chairs per day. Labor costs average Br 480, material costs
are typically Br 200, and overhead cost is Br 250. If ABC sells the chairs to a retailer
for Br 70 each, determine the multifactor productivity.
e. Last week employees at ABC produced 46 chairs after working a total of 200 hours. Of
the 46 chairs produced, 12 were damaged due to a problem with the new sanding
machine. The damaged chairs can be discounted and sold for Br 25 each. The
undamaged chairs are sold to a department store retail chain for Br 70 each. What was
the labor productivity ratio for last week? If labor productivity was Br 15 in sales per
hour the previous week, what was the change in labor productivity?
4. Dashen Bank employs three loan officers, each working eight hours per day. Each officer
processes an average of five loans per day. The bank’s payroll cost for the officers is Br 820 per
day, and there is a daily overhead expense of Br 500. The bank has just purchased new computer
software that should enable each officer to process eight loans per day, although the overhead
expense will increase to Br 550. Evaluate the change in labor and multifactor productivity
before and after implementation of the new computer software.
5. Tabor Ceramics makes ceramic vases for a chain of department stores. The output and cost
figures over the past four weeks are shown here. Labor costs Br10 an hour, and materials are
Br 4. Calculate the (a) labor productivity (in hrs), (b) material productivity, and (c) multifactor
productivity for each week. Comment on the results.
Week
1
2
3
4
2000
4000
5000
7000
Number of workers
4
4
5
6
Hours per week per worker
40
48
56
70
Material cost
286
570
720
1000
Units of output
Chapter Two (Operation strategy and competitiveness)
1. A manager has the option of purchasing one, two, or three machines. Fixed costs and potential
volumes are as follows:
Number of machines
1
2
3
Total annual fixed costs
9600
15000
20000
Corresponding range of output
0 to 300
301 to 600
601 to 900
Variable cost is Br.10 per unit, and revenue is Br.40 per unit.
(a) Determine the break-even point for each range.
(b) If projected annual demand is between 580 and 660 units, how many machines should the
manager purchase?
2. Process X has fixed costs of Br. 20,000 per year and variable costs of Br. 12 per unit, whereas
process Y has fixed costs of Br. 8,000 per year and variable costs of Br. 22 per unit. At what
production quantity (Q) are the total costs of X and Y equal?
3. Discuss the requirements from an operations perspective of competing on (a) quality, (b) cost,
(c) flexibility, (d) speed, (e) innovation, and (f) service. Give examples of manufacturing or
service firms that successfully compete on each of the criteria listed.
4. Explain the concept of core competencies in your own words. Provide examples of a core
competency for a bank, a retail store, and an auto manufacturer.
5. List and explain the five steps of strategy formulation. Follow the steps to outline a strategy for
a company or organization with which you are familiar.
Chapter Three - Five
1. The new Health-care facility is targeted to serve seven census tracts in Delhi. The table
given below shows the coordinates for the centre of each census tract, along with the
projected populations, measured in thousands. Customers will travel from the ten census
tract centres to the new facility when they need health-care. Four locations being
considered for the new facility are at (5.5, 4.5) , (7, 2), (5,2) and (4,3) which are the centres
of census tracts A, D, F and G. Details of seven census tract centres, co-ordinate distances
along with the population for each centre are given below. If we use the population as the
loads and use rectilinear distance, which location is better in terms of its total load-distance
score?
Number
Census tract
(x,y)
Population
1
A
(5.5, 4.5)
2
2
B
(5,2)
5
3
C
(3,3)
10
4
D
(7,2)
7
5
E
(8,6)
10
6
F
(5,2)
20
7
G
(4,3)
14
8
H
(5,3)
20
9
I
(6,2)
8
10
J
(7,3)
12
2. Following is the time (in hours) required in the refitting shop and the paint shop for each
of the five cars. Assuming that cars go through the refitting operations before they are
repainted, can the owner meet the time requirements and get the contract? Use the
Johnson’s rule to minimize the flow time
Car
A
B
C
D
E
Refitting time (Hours)
6
0
5
8
2
Repainting time (Hours)
3
4
2
6
1
3. Twenty samples of n = 200 were taken by an operator at a workstation in a production
process. The number of defective items in each sample were recorded as follows.
Sample
1
2
3
4
5
6
7
8
9
10
Number of defectives
12
18
10
14
16
19
17
12
11
14
p
0.060
0.090
0.050
0.070
0.080
0.095
0.085
0.060
0.055
0.070
Sample
11
12
13
14
15
16
17
18
19
20
Number of defectives
16
14
12
16
18
20
18
20
21
22
p
0.080
0.070
0.060
0.080
0.090
0.100
0.090
0.100
0.105
0.110
Management wants to develop a p-chart using 3-sigma limits. Set up the p-chart and plot
the observations to determine if the process was out of control at any point.
4. Telecom manufactures electronic components for computers. One measure it uses to
monitor the quality of its distribution process is the number of customer invoice errors. The
distribution center manager monitored the company’s order processing and distribution by
recording the number of invoice errors for 30 days. The sample results are as follows:
Day
1
2
3
4
5
6
7
8
79
10
11
12
13
14
15
Number of errors
4
6
2
5
1
3
4
7
6
5
10
8
9
9
7
Day
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Number of errors
6
9
12
10
11
8
8
7
3
4
7
10
12
12
14
Construct a c-chart with 3𝜎 limits for invoice errors and indicate if the process was out of
control at any time.
5. From the following data select the most advantageous location for setting a plant for
making transistor radios.
Total initial investment
Total expected sales
Distribution expenses
Raw material expenses
Power and water supply expenses
Wages and salaries
Other expenses
Community attitude
Employee housing facilities
Site X
200,000
250,000
40,000
70,000
40,000
20,000
25,000
Indifferent
Poor
Site Y
200,000
300,000
40,000
80,000
30,000
25,000
40,000
Want business
Excellent
Site Z
200,000
250,000
75,000
90,000
20,000
20,000
30,000
Indifferent
Good
6. Schedule the following six jobs through two machines in sequence to minimize the flow
time using Johnson’s rule:
Job
A
B
C
D
E
F
Machine 1
5
16
1
13
17
18
Operating time
Machine 2
2
15
9
11
3
7
7. Michael provides copy services for students in Awada campus. Five customers submitted
their orders at the beginning of the week. Specific scheduling data are as follows:
Jobs
A
B
C
D
E
a.
b.
c.
d.
e.
Processing time(Days)
3
4
2
6
1
Due date
5
6
7
9
2
What is the first-come, first-served (FCFS) schedule?
What is the shortest operating time (SOT) schedule?
What is the last-come, first-served?
What is the earliest due date (EDD) schedule?
What are the mean flow times for each of the schedules above?
f. Find the late time under each schedules?
g. Make a decision under each schedule and identify which jobs are late and which are
performed on time.
8. The following table gives the operation times and due dates for five jobs which are to be
processed on machine. Assign the jobs according to the shortest operation time and
calculate the mean flow time.
Jobs
01
02
03
04
05
Processing time(Days)
6
7
4
9
5
Due date
5
3
4
7
2
9. BooksCDs.com sells books, videos, DVDs, and CDs through its Internet Web site. The
company ships thousands of orders each day from seven national distribution centers.
BooksCDs.com wants to establish a p-chart to monitor the quality of its distribution
process, specifically the number of “problem” orders. A problem order is one that is
delivered to a customer late (i.e., after five days), incorrect or incomplete. The company
sampled 500 orders every other day for 20 samples and tracked them to final customer
delivery, the results of which are as follows:
Sample
1
2
3
4
5
6
7
8
9
10
Number of problems orders
14
22
36
17
25
41
18
19
26
28
Sample
11
12
13
14
15
16
17
18
19
20
Number of problems orders
38
24
15
12
10
16
9
21
18
12
Construct a c-chart for this process using 3𝜎 limits and indicate if the process was out of
control.
10. Let us assume that a new Soft drink company is to be located in Dilla. The location factors,
factor rating and scores for two potential sites are shown in the following table. Which is
the best location based on factor rating method?
Number
1
2
3
4
5
6
7
Location factor
Land and construction costs
Proximity to customers
Raw material availability
Employee preferences
Proximity to market
Climatic condition
Taxes and other expenses
Factor rating
8
4
5
3
5
6
2
Rating
Location 1
5
6
6
3
4
2
4
Location 2
5
6
7
8
4
5
6
11. The following table contains information regarding jobs that are to be scheduled through
one machine:
Jobs
A
B
C
D
E
F
G
a.
b.
c.
d.
e.
Processing time(Days)
4
12
2
11
10
3
6
Due date
20
30
15
16
18
5
9
What is the first-come, first-served (FCFS) schedule?
What is the shortest operating time (SOT) schedule?
What is the last-come, first-served?
What is the earliest due date (EDD) schedule?
What are the mean flow times for each of the schedules above?
12. Let us assume that a new airplane station, is to be located in Addis Ababa. The location
factors, weights, and scores (1 = poor, 5 = excellent) for two potential sites are shown in
the following table. What is the weighted score for these sites? Which is the best location
to establish the airplane station?
Number
1
2
3
4
5
6
7
8
Location factor
Land and construction costs
Proximity to customers
Raw material availability
Employee preferences
Proximity to market
Climatic condition
Taxes and other expenses
Fee charge
Weight
8
4
5
3
5
6
2
3
Rating
Location 1
5
6
8
3
4
2
4
5
Location 2
5
6
8
8
4
5
6
7
13. The new Health-care facility is targeted to serve seven census tracts in Delhi. The table
given below shows the coordinates for the centre of each census tract, along with the
projected populations, measured in thousands. Customers will travel from the ten census
tract centres to the new facility when they need health-care. Two locations being
considered for the new facility are at (4, 3) and (6, 2), which are the centres of census tracts
G and I. Details of ten census tract centres, coordinate distances along with the population
for each centre are given below. Find the target area’s centre of gravity for the Health-care
medical facility.
Number
1
2
3
4
5
6
7
8
9
10
Census tract
A
B
C
D
E
F
G
H
I
J
(x,y)
(5.5, 4.5)
(5,2)
(3,3)
(7,2)
(8,6)
(5,2)
(4,3)
(5,3)
(6,2)
(7,3)
Population
2
5
10
7
10
20
14
20
8
12
14. A machine at the Pacific Fruit Company fills boxes with raisins. The labeled weight of the
boxes is 9 ounces. The company wants to construct an R-chart to monitor the filling process
and make sure the box weights are in control. The quality-control department for the
company sampled five boxes every two hours for three consecutive working days. The
sample observations are as follows:
Samples
1
2
3
4
5
6
7
8
9
10
11
12
9.06
8.52
9.35
9.17
9.21
8.74
9.00
9.15
9.98
9.03
9.53
8.95
Box weights (kg)
9.13
8.97
8.85
8.61
9.09
9.21
8.95
9.20
9.03
9.21
9.05
9.01
8.87
8.71
9.05
8.35
8.50
9.06
9.21
9.05
9.23
9.20
9.23
9.15
8.90
8.81
9.05
9.10
9.26
9.46
9.02
9.11
8.88
9.10
9.00
9.06
8.46
8.95
8.42
9.53
9.35
8.89
8.78
9.06
9.13
8.47
8.92
8.95
Construct an R-chart from these data with 3 𝜎 control limits, plot the sample range values,
and comment on process control.
15. The City Square Grocery and Meat Market has a large meat locker in which a constant
temperature of approximately 40º F should be maintained. The market manager has
decided to construct an R-chart to monitor the temperature inside the locker. The manager
had one of the market employees take sample temperature readings randomly five times
each day for 20 days in order to gather data for the control chart. Following are the
temperature sample observations:
Samples
1
2
3
4
5
6
7
8
9
46.3
41.2
40.1
42.3
35.2
40.6
33.2
41.8
42.4
48.1
40.5
41.3
44.1
38.1
41.7
38.6
40.0
41.6
Temperature (°F)
42.5
43.1
37.8
36.5
34.5
33.2
39.5
37.7
40.5
39.1
38.6
43.5
41.5
40.7
41.6
40.7
40.8
40.9
39.6
42.3
36.7
38.6
42.3
44.6
43.1
39.3
42.3
10
11
12
13
14
15
16
17
18
19
20
44.7
42.6
40.5
45.3
36.4
40.5
39.5
37.6
41.0
40.9
37.6
36.5
43.5
40.4
42.0
37.5
34.3
38.2
40.6
34.3
42.3
39.2
37.3
35.4
39.1
43.1
36.2
36.2
37.6
40.3
39.1
37.6
39.3
35.3
36.1
37.2
44.7
38.9
35.1
34.1
39.7
45.2
35.4
41.2
41.1
38.2
41.6
39.5
40.1
36.8
38.7
41.2
43.7
34.8
37.6
a. Construct an R-chart based on these data using 3𝜎 limits, and plot the 20 sample range
values.
b. Does it appear that the temperature is in control according to the criteria established by
management?
16. Valtec Electronics fills orders for its electronic components and parts by truck to customers
through several distribution centers. A measure of its supply chain responsiveness is order
fulfillment lead time, which is the number of days from when a company receives an order
to when it is delivered to the customer. A distribution center manager has taken 20 samples
of 5 orders each during the month and recorded the lead time for each as follows:
Samples
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
1.3
2.1
4.2
1.6
2.6
0.8
2.6
3.4
3.1
2.4
1.9
6.1
1.2
2.4
3.7
3.6
2.4
1.2
3.3
2.1
3.0
2.7
3.5
6.1
2.5
4.8
2.7
4.9
3.4
2.9
7.0
2.7
Load Time (Days)
0.7
3.0
1.0
2.5
2.6
1.5
2.8
0.9
1.4
4.6
5.8
3.7
3.1
3.6
1.5
2.5
2.2
2.9
5.9
3.2
3.4
2.2
2.1
3.6
2.8
2.3
3.4
2.3
1.4
2.4
4.8
2.0
1.8
3.6
3.0
1.5
1.9
4.5
1.4
2.8
1.8
4.4
0.4
5.2
4.5
2.5
3.3
1.7
17
18
19
20
0.4
5.3
2.7
4.7
1.8
2.9
3.6
2.0
6.5
3.4
2.9
2.0
3.2
4.8
4.1
3.1
4.8
4.4
5.2
1.8
Construct an X - chart to be used in conjunction with an R-chart using 3𝜎 limits for this
data and indicate if the process is in control.