# MGMT 326 by linzhengnd

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```									                                    MGMT 326
Summer 2008
Test 3
Dr. Smith

Name:______________________________________________________

1. A jewelry store makes necklaces and bracelets from gold and platinum. The store
has developed the following linear programming model for determining the
number of necklaces (N) and bracelets (B) to make in order to maximize profit for
the week. The problem has been solved using Excel Solver as shown on the
attached page. Use the formulation and results to answer the questions. (24 pts.)
Max \$425N + \$275B
Subject to:
3N + 2B <= 23 (gold, oz.)
4N + 2B <= 26 (platinum, oz.)
15N + 12B <= 150 (labor hrs. available)

a. What will the store’s profit be for the week? ________________________

b. Cell E12 has an equation in it. What is the equation in cell format?

___________________________________________

c. Non-negativity constraints are not given above. If they apply, write them.
If they do not apply, explain why they do not apply to this problem.

_________________________________________________________

d. In Solver, what would the Target Cell be? _________________________

e. In Solver, which cells are changed? _____________ _______________

f. How would the constraint for platinum be entered into Solver (in cell
format)?
___________________________________________________

g. Oops! We forgot we only have a few clasps available. The necklaces and
bracelets each use the same clasp, but we only have 8 clasps available for
next week. Write the constraint in standard linear programming format
(like the ones above).

____________________________________________________
Continued on next page
h. Janie, one of the jewelry craftsmen, really wants to work some overtime
next week to get money for vacation. Should we let Janie work overtime?
Why or why not?

2. Chapters 7 (JIT) and 10 (Layout) mentioned cellular layouts.

a. What are cellular layouts? You answer should include group technology
and that you understand the concept of group technology. (6pts)

b. What is the benefit of a cellular layout over a product layout? (3 pts)

_______________________________________________

c. Benefit over process layout? (3 pts.)

_______________________________________________

3. Give an example of when a company should select a location that is close to: (4
pts)

a. Suppliers _____________________________________________

b. Customers _____________________________________________
4. Slide 4 for chapter 9 stated, “Capacity is usually purchased in chunks.” Explain
and use an example. (4 pts.)

5. Compare process layouts and product layouts with respect to the following
criteria. (Be very clear in your comments to help me understand which is which.)
(12 pts.)

a. Capital intensity and automation

b. Flexibility

c. Processing rates

d. Space requirements

6. Job specialization has several advantages and several disadvantages. Name two of
each. (4 pts.)

Advantages of job specialization

i. ______________________________________________________

ii. ______________________________________________________

Disadvantages of job specialization

i. _______________________________________________________

ii. _______________________________________________________
7. We discussed three ways jobs could be changed to eliminate employee boredom.
Name any two of these ways. (4 pts.)

____________________________________________________________

____________________________________________________________

8. When calculating a standard time, the observed time is multiplied by the
performance rating to get the normal time. The normal time is adjusted for the
allowance factor to get the standard time. Briefly explain either performance
rating or the allowance factor. (Either means either. If you put both, I will grade
the first one.) (5 pts.)

9. Transportation problems are a special case of linear programming. For a
transportation problem, the objective always is to: (4 pts.)

_______________________________________________________
10. To find which capacity is best, we look at the best operating level using
economies of scale. (4 pts.)

a. What are economies of scale?

b. What are diseconomies of scale?

11. When making location decisions what factors related to labor should be
considered in addition to the general availability of the labor. Name any one of
the three issues we discussed in class. (4 pts.)

_________________________________________________________

12. When using an REL chart for layout development and analysis, what do the
following ratings mean? (4 pts.)

A      _____________________________________________________

X      _____________________________________________________

13. In recent years many companies have opened factories in other countries for
cheaper labor. However there can be disadvantages to foreign locations. Name
two of the disadvantages of global locations that we discussed in class. (4 pts)

a. _______________________________________________________

b. _______________________________________________________
14. A local craftsman makes birdhouses for sale at local craft shows and flea markets.
He makes birdhouses for wrens and bluebirds. The demand for wren houses has
been limited to about 30 per month, but the demand for bluebird houses is
unlimited, since there are a lot of them in his area and people find their coloration
attractive. Each wren house takes 4 hours of labor and 4 units of lumber. Each
bluebird house requires 2 hours of labor and 8 units of lumber. The craftsman has
available 60 hours of labor and 120 units of lumber, and he does not want to make
the long drive to get more lumber. Wren houses yield a profit of \$6 and bluebird
houses yield a profit of \$10.

Give a complete linear programming formulation in standard format to help the
craftsman decide how many of each birdhouse to produce. (11 pts.)

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