operation management problems

| December 3, 2015

Problem 1.

Arsenal Electronics is going to construct a new $1.2 billion semiconductor plant and has selected four towns in the Midwest as potential sites. The important location factors and ratings for each town are as follows:

Scores (0 to 100)
Location Factor Weight Abbeton Bayside Cane Creek Dunnville
Work ethics 0.18 80 90 70 75
Quality of life 0.16 75 85 95 90
Labor laws/unionization 0.12 90 60 60 70
Infrastructure 0.10 60 50 60 70
Education 0.08 80 90 85 95
Labor skill and education 0.07 75 65 70 80
Cost of living 0.06 70 80 85 75
Taxes 0.05 65 70 55 60
Incentive package 0.05 90 95 70 80
Government regulations 0.03 40 50 65 55
Environmental regulations 0.03 65 60 70 80
Transportation 0.03 90 80 95 80
Space for expansion 0.02 90 95 90 90
Urban proximity 0.02 60 90 70 80

 

Recommend a site based on these location factors and ratings.

Answer 1:

 

 

 

 

Problem 2.

Sawyer Furniture is one of the few remaining domestic manufacturers of wood furniture. In the current competitive environment, cost containment is the key to its continued survival. Demand for furniture follows a seasonal demand pattern with increased sales in the summer and fall months, culminating with peak demand in November.

The cost of production is $16 per unit for regular production, $24 for overtime, and $33 for subcontracting. Hiring and firing costs are $500 per worker. Inventory holding costs are $20 per unit per month. There is no beginning inventory. Ten workers are currently employed. Each worker can produce 50 pieces of furniture per month. Overtime cannot exceed regular production. Given the following demand data, use Excel Solver to design an aggregate production plan for Sawyer Furniture that will meet demand at the lowest possible cost.

Input: Beg. Wkrs 10 Regular $16 Hiring $500  
  Units/wkr 50 Overtime $24 Firing $500  
  Beg. Inv. 0 Subk $33 Inventory $20  
  Month Demand Reg OT Subk Inv #Wkrs #Hired #Fired
  Jan 500 500 0 0 0 10 0 0
  Feb 500 500 0 0 0 10 0 0
  Mar 1000 1,000 0 0 0 20 10 0
  Apr 1200 1,000 200 0 0 20 0 0
  May 2000 1,000 1,000 0 0 20 0 0
  Jun 400 400 0 0 0 8 0 12
  Jul 400 400 0 0 0 8 0 0
  Aug 1000 1,000 0 0 0 20 12 0
  Sep 1000 1,000 0 0 0 20 0 0
  Oct 1500 1,500 0 0 0 30 10 0
  Nov 7000 3,500 3,500 0 0 70 40 0
  Dec 500 500 0 0 0 10 0 60
  Total 17,000 12,300 4,700 0 0 246 72 72

Answer 2:

 

 

 

 

 

 

 

 

Problem 3.

A retailer experiences a seasonal demand pattern for its services. Labor requirements over a typical six-month period follow.

 

Period 1 2 3 4 5 6
Requirement 12 10 12 8 9 8

 

Costs associated with operations are as follows:

Wages = $1,500 per worker per month

Hiring cost = $1,500 per worker

Layoff cost = $1,500 per worker

 

The current workforce level is 11 workers. Use the spreadsheet approach and the preceding data to answer the following questions.

 

  1. What is the total cost of the staffing plan, including the cost of regular wages, hiring, and layoffs using a chase strategy with hiring and layoffs, but no overtime?
  2. What is the total cost of the staffing plan, including the cost of regular wages, hiring, and layoffs using a level strategy with hiring and layoffs, with overtime of up to 25% of the regular-time capacity, and that overtime wages are 150% of the regular-time rate.

 

  1. CHASE Strategy
  1 2 3 4 5 6 Total
INPUTS              
Forecasted demand 12 10 12 8 9 8 59
Workforce level              
Undertime              
Overtime              
Utilized time              
               
Hires              
Layoffs              
CALCULATED              
Utilized time cost              
Undertime cost              
Overtime cost              
Hiring cost              
Layoff cost              
               
Total Cost              

 

 

 

 

 

 

  1. LEVEL Strategy
  1 2 3 4 5 6 Total
INPUTS              
Forecasted demand 12 10 12 8 9 8 59
Workforce level              
Undertime              
Overtime              
Utilized time              
               
Hires              
Layoffs              
CALCULATED              
Utilized time cost              
Undertime cost              
Overtime cost              
Hiring cost              
Layoff cost              
               
Total Cost              

 

**Don’t forget to figure out the required number of employees for the Level Strategy

 

 

Answer 3:

 

 

 

 

 

 

 

 

 

 

Problem 4.

  The Union Manufacturing Company is producing two types of products: A and B. The demand forecast, batch size, and time standards for the Mark I operation follow:

 

  Product A Product B
Demand forecast (units/yr.) 1,000 4,000
Batch size (units/batch) 20 10
Process time (hr./unit) 3.2 4.5
Setup time (hr./batch) 10 20

 

The company works 250 days per year and operates 2 shifts, each covering 8 hours. If a 20 percent capacity cushion is maintained, how many Mark I machines are required if Union does not resort to any short-term capacity options?

Answer 4:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Problem 5.

A firm of four departments has the following trip matrix and current block plan of all departments:

Trips Between Departments

Dept. Name A B C D
A …. 14 6 9
B   …. 7 16
C     …. 2
D       ….

 

A B
D C

 

 

 

 

  1. What is the weighted-distance score for the current layout? (Assume rectilinear distance and that the distance between departments A and B is one unit of distance.)
  2. What would be the weighted-distance score for the following layout?

 

A C
D B

 

 

 

 

 

 

Answer 5:

 

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