Module 2 – Homework Solutions

Posh Nails

PN1. S1: 1min; S2: 8min; Dryer chair: 10min; S3: 4min

Bottleneck: The dryer chair

PN2. Flow rate/capacity = (1/10) / (1/8) = 8/10 = 0.8

PN3. (1+8+4)/(13 + (9+2+6)) = 3/30 = 0.433

PN4. Direct labor cost = wage rate per hour / flow rate per hour = $36 per hour / 6 customers
per hour = $6 per customer

Butternut

BN1. Use Little’s Law: 1296 skiers/hour*5/60 = 108 skiers

Tech Co.

TC1.
COGS = Revenue*(1-gross margin)
$ 155,000,000*(1-0.29) = 110,050,000
COGS/Inventory = Inventory Turns
110,050,000/20,000,000 = 5.5

TC2.
Annual Inventory cost of MP3s = Cost of MP3s sold*Inventory cost
Assuming the margin for the MP3 player is the same as for the rest of the firm, the MP3 player
is purchased for $35.50
Per unit Inventory cost of MP3s = Annual Inventory Cost of MP3s/Inventory Turns
$35.50*.35/5.5 = $2.26

1
Gamer Co.

GC1.

Activity capacity Demand Implied utilization

(ideas/hr) (ideas/hr)
Paper screening 3/2 25/5/8 41.7%
Design & Production 1 25/5/8 *0.6 37.5%
Testing 6/(2*8)=.375 25/5/8 *0.6 100 %
Focus group 1/2 25/5/8 *0.6*0.5 37.5%
Final decision 1/3 25/5/8 *0.6*0.5*0.35 19.7%
RESULT 25/5/8
*0.6*0.5*0.35*0.75

This would be 25*0.6*0.5*0.35*0.75 = 1.97 ideas/week.

ANSWER: __1.97 _ idea(s)/week

GC2.
ANSWER: Testing .

GC3.

At the testing stage, only 0.375 ideas/hour will make it through.

So this means 0.375 * 0.5 * 0.35 * 0.75 = .049 ideas/hour or 1.96 ideas/week will be put into
production.
Note that this is the same as the unconstrained amount in question GC1 (no implied utilization
exceeds 100%).