2866279 operation MGT

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					                         OPERATIONS MANAGEMENT

Answer the questions in Microsoft Word. Each question is worth 10 points and
partial credit will be given. FOR MAXIMUM PARTIAL CREDIT SHOW ALL

   1. A radar unit has five critical components. If any one component should
      fail, the radar unit would be rendered ineffective. The component
      reliabilities are .994, .991, .915, .990, and .972, respectively. What is the
      system reliability with redundancy for the third component?

   2. Janice Smith is an expert in calligraphy. However, it is found that a
      specialized robot can imitate Janice's work perfectly (or at least close
      enough). Variable costs are 85% of selling price and fixed costs are
      $300,000 for the robot system. How many pieces must be produced by
      the robot system to break even if she sells them for $200?

   3. State Division of Motor Vehicles (DMV) statistics show the rate of new
      driver's license applications to be as shown:

             Month         Week          Applications

             November         1               240
                              2               200
                              3               215
                              4               210
             December         1               210
                              2               212
                              3               200
                              4               216

      Using weights of 1/3 for the most recent week, ¼ for the next most recent
      week, ¼ for the third most recent week, and 1/6 for the fourth most recent
      week, what is the four period weighted moving average forecast for the
      first week in January?

   4. Why is high quality so important in manufacturing or services?

   5. A company is trying to decide whether to buy a product it uses or to
      produce the product itself. It expects to need 80,000 units per year and
      has collected the following cost information for three options:
                                  Buy           Produce               Produce
                                  Product       Manually              Automated
            Fixed Cost               NA         $225,000              $350,000
            Variable Cost         $30/unit      $20/unit              $18/unit
      What should the company do? Show any calculations made to decide.
6. Why are we so concerned about achieving high productivity?

7. An electronics company exports personal computers. Their PC sales in
   thousands over the past five years are given below:

                         Year               Sales
                          1                  5
                          2                  9
                          3                  12
                          4                  15
                          5                  20

   What is the regression equation if the company wants to use that method
   for forecasting sales? Based on the coefficients of correlation and
   determination, would you recommend that they use this method? Why, or
   why not?

8. Explain what line balancing and its goal are.

9. A regional fast-food restaurant is considering an expansion program. The
   major factor influencing the success of such a program is the future level
   of interest rates. It is estimated that there is a 40 percent chance that
   interest rates will increase by 3 percentage points, a 35 percent chance
   that they will remain the same, and a 25 percent chance that they will
   decrease by 3 percentage points. The alternatives they are considering
   and possible payoffs are shown in the following table:

                                Rates       Rates         Rates
                                Increase    No Change     Decrease
   Build 50 new places          -$100,000   +$150,000     +$250,000
   Build 25 new places          -$80,000    +$100,000     +$180,000
   Do Nothing                   -$50,000    +$50,000      +$125,000

   Using decision tree analysis, calculate the expected value of each
   alternative, and decide which would be the best to follow.

10. The Northwest Flower Company owns a greenhouse, which furnishes
    roses and carnations to florists in Oregon, Washington, and Idaho. The
    greenhouse can grow any combination of the two flowers. They sell the
    flowers in "bunches" with 25 blooms to a bunch. They have up to 10,000
    square feet available for planting this year. Each bunch of roses takes
    about 4 square feet and each bunch of carnations about 5 square feet.
    Special fertilizer is required for flowers; roses need 5 pounds and
    carnations 2 pounds. The availability of the fertilizer is limited to 5000
    pounds. Sales commitments require the company to grow at least 500
bunches of roses. Profit contributions are $6 per bunch of roses and $8
per bunch of carnations. What is the optimum profit and planting for this

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