BUAD 470 - Managing Quality and Operations
Final Preparation Guide
1. Key concepts of Chapter 3 – Forecasting (only those topics covered after
midterm)
a. Forecasting with linear trend time series
i. Interpretation of the trend equation
ii. How to use trend equation to forecast for a given time period
b. Forecasting for time series with trend and seasonality
i. Interpretation of seasonal indices: what do they mean?
c. Forecasting accuracy measures
i. MAD and MSE
2. Key concepts of Chapter 8 – Facility Location
a. Objectives of locations decisions
b. Factors that influence location decisions, and how?
c. Comparison of service and manufacturing considerations
d. Cost-Profit-Volume Analysis
e. Center of gravity method
f. Locational break-even analysis
3. Key concepts of Chapter 6S and 8S – Linear Programming and
Transportation Problem
a. Components of a LP
i. Decision variables
ii. Objective function (either max or min) & formulated in terms of
decision variables
iii. Constraints (>=, <=, or =) and expressed in terms of decision
variables
b. LP formulation: focus on the following 2 classes of problems
i. Product mix
ii. Transportation problem
c. A LP can have only 3 possible outcomes
i. Either it has an optimal solution, or
ii. It is infeasible, (what is an infeasible solution?), or
iii. It is unbounded
4. Key concepts of Chapter 11 – Inventory Management
a. Types of inventory (you may be asked for examples in a specific scenario,
for example a hospital)
b. Functions of inventory
c. Objective of inventory control
d. Different inventory costs: what do they mean? Examples of holding cost,
ordering cost, etc.
e. EOQ model
i. Assumptions of EOQ model
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ii. Understanding and ability to calculate (refer to in-class examples
of lecture #5)
1. holding cost
2. ordering cost
3. when holding cost = ordering cost => EOQ
4. length of order cycle
5. number of orders per year
6. lead time
7. reorder point
8. illustration of order cycles in a graph
5. Key concepts of Chapter 17 – Project Management
a. Characteristics of a project
b. How is project management different from operations scheduling?
c. Key performance metrics of project management
d. Key responsibilities of a project manager
e. Understanding and ability to represent/calculate
i. Project network diagrams
ii. AOA representation
iii. AON representation
iv. Critical path and its significance
v. Critical activities
vi. Slack activities and how slack is calculated
vii. Expected project duration with certain and uncertain activity times
Practice Problems
Please review all homework questions and problems very
carefully.
1. A location analysis has been narrowed down to three locations. The critical
factors, their weights, and the ratings for each location are shown below:
Factor
Wt.
Location
A
B
C
Labor Cost
.4
70
80
90
Transp. Cost
.2
80
80
60
Market Access
.2
90
70
60
Raw Mat'l. Access
.1
50
70
90
Utility Cost
.1
80
90
70
What is the composite score for location A?
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2. Weekly shipments to each warehouse will be: WH1, 100; WH2, 150; WH3, 120;
WH4, 150; and WH5, 120. What is the optimal location of the distribution center?
Location
1
2
3
4
5
(X,Y)
2,3
3,7
5,5
7,3
8,7
3. For the constraints given below, which point is in the feasible solution space of this
maximization problem?
(1) 14x + 6y  42
(2) x - y  3
A) x = 1, y = 5
B) x = 2, y = 1
C) x = 2, y = 8
5. A set of activities in a project, their immediate predecessors and expected times
are listed below. A part of the Management Scientist output has also been
provided.
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(a) Determine the slack of each activity.
(b) Which activities are critical and why?
(c) What is the project completion time?
(d) Can activity I be delayed without delaying the project’s completion? Justify your
answer.
6. A car rental agency uses 96 boxes of staples a year. It costs $10 to order staples,
and carrying costs are $0.80 per box on an annual basis.
Based on the Economic Order Quantity (EOQ) as determined by Management Scientist
and other information provided below, answer the following questions?
INVENTORY POLICY
****************
OPTIMAL ORDER QUANTITY
48.99
ANNUAL ORDERING COST
$19.60
TOTAL ANNUAL COST
$39.19
MAXIMUM INVENTORY LEVEL
48.99
AVERAGE INVENTORY LEVEL
24.49
NUMBER OF ORDERS PER YEAR
CYCLE TIME (DAYS)
1.96
186.26
(a) What is the EOQ?
(b) What is the significance of EOQ?
(c) What is the annual inventory holding cost at EOQ?
(d) How frequently does the company place order for staples?
(e) What is the annual expenditure for ordering 60 boxes of staples? Is ordering 60 boxes
a good idea for this company?
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6. A campaign manager for a political candidate must arrange the shipment of 150
cartons of campaign buttons from three button producers (sources 1, 2, 3) to three
campaign headquarters. The supplies and demands, and the per-carton transportation
costs, are shown below:
SOURCE
1
2
3
Demand
DESTINATION
CAMPAIGN HEADQUARTERS
1
2
3
$2
$5
$6
9
3
7
1
8
4
20
70
60
Supply
50
50
50
A)
B)
C)
D)
E)
a. Which of the following is an objective function for the problem?
Min 50X11 + 50X12 + 50X13 + 20X31 + 70X32 + 60X33
Min 2X11 + 5X12 + 6X13 + 9X21 + 3X22 + 7X23 + X31 + 8X32 + 4X33
Max 2X11 + 5X12 + 6X13 + 9X21 + 3X22 + 7X23 + X31 + 8X32 + 4X33
Max 20X11 + 70X12 + 60X13 + 50X31 + 50X32 + 50X33
None of the above.
A)
B)
C)
D)
E)
b. Which of the following is a constraint for the suppliers (button
producers)?
2X11 + 5X12 + 6X13 = 50
9X11 + 3X12 + 7X13 = 50
X11 + X12 + X13 = 50
X11 + X21 + X31 = 20
all of the above
A)
B)
C)
D)
E)
c. Which of the following is a constraint for the customer (campaign
headquarters)?
2X11 + 9X21 + X31 = 20
5X12 + 3X22 + 8X32 = 70
X11 + X12 + X13 = 50
X12 + X22 + X32 = 70
all of the above
A)
B)
C)
D)
E)
d. Which of the following is not a constraint for the above problem?
X11 + X12 = 35
X31 + X33 = 10
X11 + X21 + X31 = 160
X12 + X22 + X32 = 80
none are constraints
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7. Muir Manufacturing produces two popular grades of commercial carpeting among its
many other products. In the coming production period, Muir needs to decide how many
rolls of each grade should be produced in order to maximize profit. Each roll of Grade X
carpet uses 50 units of synthetic fiber, requires 25 hours of production time, and needs 20
units of foam backing. Each roll of Grade Y carpet uses 40 units of synthetic fiber,
requires 28 hours of production time, and needs 15 units of foam backing.
The profit per roll of Grade X carpet is $200 and the profit per roll of Grade Y carpet is
$160. In the coming production period, Muir has 3000 units of synthetic fiber available
for use. Workers have been scheduled to provide at least 1800 hours of production time
(overtime is a possibility). The company has 1500 units of foam backing available for
use.
(a) Develop a linear programming model for this problem.
(b) Can the company produce 100 rolls of each type?
(c) What would be the objective function value if X=20 and Y=25?
8. The dean of a school of business is forecasting total student enrollment for this
year's summer session classes based on the following historical data, and obtains the
following linear trend equation based on the following data.
YEAR
Four years ago
Three years ago
Two years ago
Last year
TOTAL ENROLLMENT
2,000
2,200
2,800
3,000
F (t)
(a) Are enrollments increasing? If so, by how much each year?
(b) Forecast enrollments for this year and the following year. Assume t=1 corresponds to
4 years ago.
(c) Approximately when will the school have 4000 students?
(d) Actual enrollments this year are 3500. Determine the error in the dean’s forecast.
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