Fall 2018-2019

BA2601 Operations Management

Recitation 2

1. An electronics manufacturer must expand by building a second facility. The search has been
narrowed to four locations, all acceptable to management in terms of dominant factors.
Assessment of these sites in terms of seven location factors is shown in table below. For
example, location A has a factor score of 5 (excellent) for labor climate; the weight for this
factor (20) is the highest of any.

Factor Score for Each Location

Factor
Location Factor Weight A B C D

1.Labor climate 20 5 4 4 5
2.Quality of life 16 2 3 4 1
3.Transportation system 16 3 4 3 2
4.Proximity to markets 14 5 3 4 4
5.Proximity to materials 12 2 3 3 4
6.Taxes 12 2 5 5 4
7.Utilities 10 5 4 3 3

Calculate the weighted score for each location. Which location should be recommended?

2. The operations manager for Mile-High Beer has narrowed the search for a new facility
location to seven communities. Annual fixed costs (land, property taxes, insurance,
equipment, and buildings) and variable costs (labor, materials, transportation, and variable
overhead) are shown in table below.

Community Fixed Cost per Year Variable Cost per Barrel

Aurora $ 1,600,000 $ 17.00

Boulder $ 2,000,000 $ 12.00
Colorado Springs $ 1,500,000 $ 16.00
Denver $ 3,000,000 $ 10.00
Englewood $ 1,800,000 $ 15.00
Fort Collins $ 1,200,000 $ 15.00
Golden $ 1,700,000 $ 14.00

a. Which of the communities can be eliminated from further consideration because they are
dominated (both variable and fixed costs are higher) by another community?

1
Fall 2018-2019

b. Plot the total cost curves for all remaining communities on a single graph. Identify on the
graph the approximate range over which each community provides the lowest cost.
c. Using break even analysis, calculate the break-even quantities to determine the range over
which each community provides the lowest cost.

3. A supplier to the electric utility industry has a heavy product, and transportation costs are
high. One market area includes the lower part of Great Lakes region and the upper portion
of the Southeastern region. More than 600,000 tons are to be shipped to eight major
customer locations, as shown in the table below.

Customer Location Tons Shipped xy- Coordinates

Three Rivers, Mich. 5,000 (7,13)

Fort Wayne, Ind. 92,000 (8,12)
Columbus, Ohio 70,000 (11,10)
Ashland, Ky. 35,000 (11,7)
Kingsport, Tenn. 9,000 (12,4)
Akron, Ohio 227,000 (13,11)
Wheeling, W.V. 16,000 (14,10)
Roanoke, Va. 153,000 (15,5)

a. Calculate the center of gravity, rounding distance to nearest tenth.

b. Calculate the load-distance score for this location, using rectilinear distance.

4. A defense contractor is evaluating its machine shop’s current process layout. Figure 1
shows the current layout, and the table shows the trip matrix for the facility. Safety and
health regulations require departments E and F to remain at their current locations.

Trips Between Departments

Department A B C D E F
A - 8 3 9 5
E B F
B - 3
A C D C - 8 9
Figure 1 Current Layout D - 3
E - 3
F -
Table 1 Trip Matrix

2
Fall 2018-2019

a. Use trial and error to find a better layout.

b. How much better is your layout than the current one, in terms of the load-distance score?
Use rectilinear distance.

5. A company is setting up an assembly line to produce 192 units per eight-hour shift. The
following table identifies the work elements, times, and immediate predecessors.

Work Time Immediate

Element (sec) Predecessor(s)
A 40 None
B 80 A
C 30 D, E, F
D 25 B
E 20 B
F 15 B
G 120 A
H 145 G
I 130 H
J 115 C, I
Total 720

a. What is the desired cycle time?

b. What is the theoretical minimum number of stations?
c. Use the longest task time rule to work out a solution and show your solution on a precedence
diagram.
d. What are the efficiency and balance delay of the solution found?