Running Head: TEST 6 and HW 1

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Running Head: TEST 6 and HW 2

Question 1: You are designing a grocery delivery business. Via the internet, your company

will offer staples and frozen foods in a large metropolitan area and then deliver them

within a customer-defined window of time. You plan to partner with two major food stores

in the area. What should your competitive priorities be and what capabilities do you want

to develop in your own core and support processes?

Answer: Keeping in mind the end goal to set up an online basic supply conveyance business

there are few elements that need to be considered for business to be effective. First and foremost

component is the association with the supermarkets. Here, we will join forces with two block and

mortar store that ought not to have any kind of conveyance administrations. Further we must be

sure that we will have clients why should willing pay additional cash for administration. The

perfect client will be who drives an amazingly frenzied life, and does not care for going by

supermarkets and they ought to have medium to high pay. At that point after that we ought to

consider our focused needs and those are:

Cost Significance: Corporations and producers are concerned with value that can represent the

moment of truth the differentiator component with the opposition. The entire expense ought to

incorporate generation cost, efficiency, limit usage, stock diminishment.

Quality Significance: This classification incorporates execution, highlights, dependability,

conformance, toughness and saw quality.

Conveyance Time: On time conveyance is the capacity to convey as indicated by guaranteed

timetable. This variable is key for unrivaled aggressiveness. This business ought to contend on

the premise of unwavering quality conveying items when guaranteed.

Running Head: TEST 6 and HW 3

Around here, the director of the organization ought to concentrate on building up a viable

operational methodology for shutting the hole between focused need and abilities. Another

fundamental point is system for satisfaction. The three systems are: grabbing from store rack,

getting from store's satisfaction focus and last is getting from perpetual committed focus.

Finally, the business must put resources into the powerful and dependable data innovation and

incredible IT division. As all requests are delivering the goods web and this is amazingly vital

point. Clients will depend on framework and in the event that it comes up short then they won't

return to place requests and business will be lost.

Question 2: Is it possible for a project to have more than one critical path? Discuss the

implications of such a situation with respect to each of the following aspects:

a) Project risk
b) Total available slack
c) Resource dependencies
d) Responsibilities of the project manager

Answer: Yes, it is conceivable to have more than one basic way in the venture. It is absolutely

not perfect setting. In the event that there is more than one discriminating way then for the

venture director and his group that they may have fewer assets and have more redirection.

Project Risk: If the task has more than one basic way then the dangers for venture will without a

doubt increment. Fulfillment of whole venture could be deferred by deferring exercises along

any of the basic ways. Eg: If a venture comprises of two exercises performed in parallel and each

obliges three days for finishing. It would be basic for finishing of both exercises to be finished in
Running Head: TEST 6 and HW 4

3 days. Subsequently, a deferral in one way may happen because of fulfillment of other

movement.

Total Available Slack: If a project has more than one critical path, then the total available slack

should be enough so that demand of all can be fulfilled in short notice. Total available slack can

also be related to speed to complete the project. The capacity to do things rapidly in light of

client requests and in this manner offer short lead times between when a client arranges an item

or administration and when they get it.

Resource dependencies: Dependencies are the connections among assignments which focus the

request in which exercises need to be performed. Dependencies are the connections of the

previous assignments to the succeeding tasks. The most well-known reliance relationship is a

completion to-begin relationship. So when a project has more than one critical path, all the

processes should be completed on time.

Responsibilities of the Project Manager: The Project Manager is responsible for managing the

work of the team, allocating and utilizing resources in an efficient manner and maintaining a co-

operative, motivated and successful team. So, if a project has more than one critical path the

project manager must develop such strategies so that all the jobs could be completed on time

without delaying the time of delivery.

Question 2: A flowchart helps us see all of the steps in a process, which in turn helps us

improve the process. It also helps us identify and eliminate any redundant steps in a

process. Using Word tools (SmartArt under the Insert tab), design a process flow chart for

the grocery delivery business in Question 1 above. In the discussion element of your

response, clearly define the steps within the process and provide a rationale for each step.

Include all elements that you feel are necessary and appropriate to the process of a singular
Running Head: TEST 6 and HW 5

customer. The assumption is that the process is repeatable for every customer using the

service. Think of the elements that you will be addressing or answering in the succeeding

questions.

Answer:

Accepting an order for a grocery item from a customer

Placing the grocery item ordered by a customer in a tote

Placing the tote onto a removable rack in a warehouse

Transferring the rack with the tote thereon into a first vehicle.
Dispatching the first vehicle to transfer point between the
warehouse and the delivery destination
Transferring the rack with the tote thereon from the first vehicle
to second vehicle
Delivering the tote to the delivery destination using the second
vehicle

Placing the tote into secure expandable bag attached to the box
situated outside the delivery destination

Opening, by the customer, a second lock on the second opening

of the bag to gain access to the tote stored within

Storing the bag in a collapsed state within the box when it is not
used to store the tote

A strategy for dispersing staple goods embodying:

Tolerating a request for a basic need thing from a client, said staple thing to be conveyed to a

conveyance destination;

Setting the basic need thing requested by a client in a tote; setting the tote onto a removable rack

in a stockroom;

Exchanging the rack with the tote consequently into a first vehicle;
Running Head: TEST 6 and HW 6

Dispatching the first vehicle to an exchange point between the distribution center and the

conveyance destination;

Exchanging the rack with the tote consequently from the first vehicle to a second vehicle;

Conveying the tote to the conveyance destination utilizing the second vehicle; and

Setting the tote into a protected expandable sack joined to a crate arranged outside the

conveyance destination. When the pack is not used to store the tote, it is in a crumpled state and

is put away inside of the crate; and

Wherein the client opens a second bolt on a second opening of the pack to obtain entrance to the

tote put away inside.

Clients submit their requests by an early night cutoff time for conveyance of things on the next

morning. On the off chance that the conveyances are not set by the cutoff time, conveyance of

the things will be postponed by one day. The basic need request is filled by an agent at a

stockroom inside of a 5-6 hour conveyance range of the conveyance destination determined by

the client. The assistant places some goods in a tote, which may be apportioned into no less than

two segments. To serve a bigger territory with a bigger sweep while keeping up the 5-6 hour

conveyance time, one or more extra stockrooms will be set up. Implies for keeping up some

basic supplies at a fancied chilled temperature are brought into the tote when perishable goods

are to be conveyed. These methods may be, yet are not constrained to, a solidified addition set

into the tote before the tote is fixed or a chilled gas pumped into a bit of the tote.

Question 3: For the grocery delivery business addressed in Question 1, the grocery chains

that you are planning to partner with use differing inventory control models. Company A

utilizes the Just-in-Time (JIT) inventory control model and Company B uses an Economic
Running Head: TEST 6 and HW 7

Order Quantity model. In reviewing your business plan, the bank loan officer has noticed

this. As the loan officer is not overly familiar with either model, a request has been made of

you to provide a description of each model and an explanation of why partnering with

these companies would or would not create a conflict within your operations. Provide a

detailed analysis of the situation in your business model.

Answer: Just-in-Time Model (JIT): JIT is a stock administration framework in view of setting

littler, more successive, stock requests. JIT can rapidly uncover territories that need change,

enhance proficiency and profitability, free up extra workspace and free up additionally meeting

expectations capital. This technique is utilized to build effectiveness and abatement squander by

accepting products just as they are required in the creation process, subsequently decreasing

stock expenses.

At the point when requesting stock, two of the greatest issues are quality and expense. At the

point when all else is equivalent, picking one supplier over another by and large comes down to

which supplier offers the best value break for the biggest request.

Anyhow, stock in the end runs low and transactions start once more. Reproduce that by the

quantity of supplies we utilize, and picture the amount of time we’re buying operators spend

attempting to cut better arrangements. In the nick of time (JIT) stock administration is intended

to help streamline your operation, guarantee predictable quality and lessen on location stock.

Economic Order Quantity Model (EOQ): Economic order quantity (EOQ) is the request

amount that minimizes the aggregate stock holding expenses and requesting expenses. EOQ

applies just when interest for an item is consistent throughout the year and each new request is

conveyed in full when stock achieves zero. There is an altered expense for every request put,

paying little mind to the quantity of units requested. There is likewise an expense for every unit
Running Head: TEST 6 and HW 8

held away, normally known as holding expense, in some cases communicated as a rate of the buy

expense of the thing.

The EOQ is utilized as a major aspect of a ceaseless audit stock framework in which the level of

stock is observed at all times and an altered amount is requested every time the stock level

achieves a particular reorder point. The EOQ gives a model to figuring the suitable reorder point

and the ideal reorder amount to guarantee the momentary recharging of stock with no

deficiencies. It can be an important instrument for little entrepreneurs who need to settle on

choices about the amount of stock to continue hand, what number of things to request every time,

and how frequently to reorder to acquire the most minimal conceivable expenses.

In case of grocery delivery business, changing between suppliers to secure the least cost is fine

when business has additional storage room and won't endure if the request is a day or two late.

The issue is, when confronted with covering due dates, suppliers need to put their best clients

first and foremost, so in case of first-time or incidental client, business could get got short. That

is the reason JIT depends on long haul contracts with dependable suppliers, regularly requesting

a few sections from the same supplier, regardless of the possibility that the parts may be less

expensive through another seller. By meeting expectations intently with suppliers — as a result,

making those accomplices in assembling procedure— grocery business is tuned in to customer’s

quick needs and can give littler, more continuous shipments intended to meet the present

prerequisite.

But according to EOQ, an organization's productivity will endure in the event that it has an

excessive amount of or too little stock. On the off chance that it has a lot of stock; it is holding

outdated stock which drags down the stock turnover proportion. In the event that the organization

has too little stock, then it is liable to stock outs and loss of client goodwill. With a specific end
Running Head: TEST 6 and HW 9

goal to augment organization benefit, it needs to minimize the expenses of requesting and putting

away stock. That implies it needs to have a budgetary metric to compute the ideal amount of

stock to request and store.

Question 4: A Quality Assurance (QA) Program is essential to the success of any business.

In establishing your grocery delivery business, what are some of the Quality Control (QC)

processes that you envision employing? Why? Provide examples of potential metrics.

Justify your choices.

Answer: Quality is an essential variable in terms of any item or administration. With the high

market rivalry, quality has turn into the business differentiator for all items and administrations.

In this manner, all producers and administration suppliers out there always search for upgrading

their item or the administration quality. So as to keep up or improve the nature of the offerings,

makers utilize two procedures, quality control and quality certification. These two practices

verify that the final item or the administration meets the quality prerequisites and benchmarks

characterized for the item or the administration.

There are numerous strategies took after by associations to accomplish and keep up obliged level

of value. A few associations put stock in the ideas of Total Quality Management (TQM) and a

few others have faith in inner and outer measures. The guidelines as a rule characterize the

procedures and methods for hierarchical exercises and help to keep up the quality in every part of

authoritative working. Regarding measures for quality, there are numerous. ISO (International

Standards Organization) is one of the conspicuous bodies for characterizing quality gauges for

distinctive commercial ventures. In this manner, numerous associations attempt to stick to the
Running Head: TEST 6 and HW 10

quality necessities of ISO. Notwithstanding that, there are numerous different principles that are

particular to different commercial ventures.

Since guidelines have turn into an image for items and administration quality, the clients are

currently enthusiastic about purchasing their item or the administration from an affirmed

producer or an administration supplier. Hence, consenting to norms, for example, ISO has turn

into a need in the matter of drawing in the clients.

Measuring the quality that is conveyed is discriminating for predictable results. Administrators

and directors ought to check a representative's role as it identifies with quality guidelines. At the

point when quality misses the mark, bosses are in charge of rolling out the improvement needed

to take quality back to the best possible standard.

In case of grocery delivery business, the main things related to qualities should include deadline

date and time for delivery as the business is related to grocery delivery. So the key factor of the

business is delivery time which is promised to the customers. Also, the best quality of grocery

should be delivered to the customers.

Question 5: Efficiency is a critical element both in terms of individuals and machinery in

any business. Describe some efficiency measures that you would implement in your grocery

delivery business. What are the analysis tools that you would utilize to determine the

effectiveness of these efficiency measures?

Answer: The effective delivery of worth to a client obliges that an organization compose its

structure and capacities as indicated by the sort of item or offering conveyed. The worth chain, as

promoted by Michael Porter 1, portrays a straight arrangement of steps, which could be exercises

or business procedures, for example, outline, creation and deals, whereby an assembling
Running Head: TEST 6 and HW 11

organization conveys esteem. This worth chain conveyance model makes progress toward

general proficiency and expense diminishment by expanding the effectiveness and decreasing the

expense of every business process. Every stride is autonomous and distinguishable, and can be

outsourced, or contracted out to another organization. The worth chain turns into a store network

when an organization utilizes the inputs and exercises of different organizations in its assembling

procedure. The e-business set up as a worth shop meets expectations specifically with the client

to give an important, frequently special, arrangement. The worth shop is equipped to take care of

particular customer issues instead of to make a typical arrangement more productive. Some

worth shops, for example, huge counseling organizations, will endeavor to copy arrangements

among customers by acquainting language with portray ventures in a methodology, and by

endeavoring to fit the customer's issue to the methodology, as opposed to concentrating on the

customer's issue.

Grocery delivery business has fabricated in a few key elements in its Web website to pull in and

hold its clients. This incorporates offering an web shopping demo, a getting-started instructional

exercise, and email client support. Also, the Web webpage offers a full suite of electronic

business usefulness that permits buyers to search or find grocery things, see pictures what's

more, portrayals of item things (counting their cost), what's more, to choose things in a shopping

bushel and look at those things for conveyance. To work successfully, the different capacities

incorporated with the Web website, for example, thing looking, basic need requesting, client

profiling, electronic installments, also, conveyance booking must be firmly incorporated and

composed with each other for the Web webpage to capacity as a firm entirety.
Running Head: TEST 6 and HW 12

Problem Questions

Problem 1.
The Bureau of Labor Statistics collects input and output data from various countries for

comparison purposes. Labor hours are the standard measure of input. Calculate the output

per hour from the following data. Which country is most productive?

Labor Hours Units of Output

United States 89.5 136
Germany 83.6 100
Japan 72.7 102

Answer: Output per hour =

Units
Labor
of Output per
Hours
Output hour
United
89.5 136
States 1.519553073
German
83.6 100
y 1.196172249
Japan 72.7 102 1.403026135
United States is more productive.

Problem 2.

Construct a network from the information in the following table and identify all the paths

in the network, compute the length of each, and indicate the critical path. Determine the

earliest start and finish times, latest start and finish times, and slack for each activity.

Indicate how the critical path would be determined from this information.
Running Head: TEST 6 and HW 13

Activity Time

Activity Predecessor (weeks)

1 —  7
2 — 10
3 1  6
4 2  5
5 2  4
6 3, 4  3
7 5, 6  2

Answer:
s
k
e
2
7
3
ti
c
A
W 1
ity
v
0
6
4
5

Activit Predecesso Length of Total

y r Time Task Time ES EF LS LF

1 7 7 7 3 10 1 8
2 10 10 10 2 12 2 12
3 1 6 6+7 13 6 12 7 13
4 2 5 5+10 15 5 10 10 15
5 2 4 4+10 14 4 8 10 14
Running Head: TEST 6 and HW 14

6 3,4 3 3+6+5 14 3 6 11 14
7 5,6 2 2+4+14 20 6 8 18 20

Longest path is critical path

Critical path =Activity 7 = 20 weeks

Problem 3.
Burger Doodle is a fast-food restaurant that processes an average of 680 food orders each

day. The average cost of each order is $6.15. Four percent of the orders are incorrect, and

only 10% of the defective orders can be corrected with additional food items at an average

cost of $1.75. The remaining defective orders have to be thrown out.

Compute the average product cost.

In order to reduce the number of wrong orders, Burger Doodle is going to invest in a

computerized ordering and cash register system. The cost of the system will increase the

average order cost by $0.05 and will reduce defective orders to 1%. What is the annual net

effect of this quality improvement initiative?

What other indirect effects on quality might be realized by the new computerized order

system?

Solution:
Product cost = [(direct manufacturing cost per unit)(input) + (rework cost per unit)(reworked

units)]/ yield Product cost

= {[6.15 x 680] + [1.75(0.04)(680)(0.10)]}/ [680(0.96) + 680(0.04)(0.10)] = $6.39 = 6.4

Average Product cost = $6.4

Running Head: TEST 6 and HW 15

(b) Product cost = {[6.20 x 680] + [1.75(0.01)(680)(0.10)]}/ [680(0.99) + 680(0.01)(0.10)] =

$6.26

Annual net cost effect/ savings = 6.39 – 6.26 = 0.13 x 680 orders per day x 365 days per year =

$32,266

(c) QPR = [good-quality units/ (input)(processing cost) + (defective units)(rework cost)] x

100 QPR = {[680(0.96) + 680(0.04)(0.10)]/ [680(6.15)+680(0.04)(0.10)(1.75)]} x 100 = 15.66 =

15.7

Problem 4.
A firm is faced with the attractive situation in which it can obtain immediate delivery of an

item it stocks for retail sale. The firm has therefore not bothered to order the item in any

systematic way. However, recently profits have been squeezed due to increasing competitive

pressures, and the firm has retained a management consultant to study its inventory

management. The consultant has determined that the various costs associated with making

an order for the item stocked are approximately $70 per order. She has also determined

that the costs of carrying the item in inventory amount to approximately $27 per unit per

year (primarily direct storage costs and forgone profit on investment in inventory).

Demand for the item is reasonably constant over time, and the forecast is for 16,500 units

per year. When an order is placed for the item, the entire order is immediately delivered to

the firm by the supplier. The firm operates 6 days a week plus a few Sundays, or

approximately 320 days per year. Determine the following:

a. Optimal order quantity per order

b. Total annual inventory costs

Running Head: TEST 6 and HW 16

c. Optimal number of orders to place per year

d. Number of operating days between orders, based on the optimal ordering.

Solution:

(a)optimal order quantity = [2 * (Annual Usage in Units * Setup Cost) / Annual Carrying
Cost per Unit]^(1/2)
Annual cost for making an order = 16500*70 = $1155000
Annual carrying cost = $27

(a)Optimal order quantity = (2*1155000/27) ]^(1/2)

= 292.50
(b) Total annual inventory costs=

C=Carrying cost per unit per year = $27 per unit per year
Q=Quantity of each order = 292.50
F=Fixed cost per order = $70
D=Demand in units per year =16500
Total Inventory Cost = $292 (after putting and calculating from above formula)
© Optimal number of orders to place per year = 292.50*12 = 3510
Problem 5.

The Commonwealth Banking Corporation issues a national credit card through its various

bank branches in five southeastern states. The bank credit card business is highly

competitive and interest rates do not vary substantially, so the company decided to attempt

to retain its customers by improving customer service through a reduction in billing errors.

The credit card division monitored its billing department process by taking daily samples

of 200 customer bills for 30 days and checking their accuracy. The sample results are as

follows:
Running Head: TEST 6 and HW 17

Sample Number of Defectives Sample Number of Defectives

 1  7 16 10
 2 12 17 12
 3  9 18 14
 4  6 19 16
 5  5 20 15
 6  8 21 13
 7 10 22  9
 8 11 23 10
 9 14 24 12
10 10 25 15
11  9 26 14
12  6 27 16
13  3 28 12
14  2 29 15
15  8 30 14
Develop a -chart for the billing process using control limits and indicate if the process

is out of control.

Solution:

Upper Control Limit (UCL) = p + zp

Lower Control Limit (LCL) = p – zp
Where z = the number of standard deviations from the process average
P = the sample proportion defective; an estimate of the process average
P bar = Total Defectives / Total Sample Observations
p = the standard deviation of the sample proportion
p = sqrt(p bar(1 – p bar) /n)
n = sample size
Therefore, UCL = p bar +z + sqrt(p bar (1 – p bar)/n)
Running Head: TEST 6 and HW 18

Sample Defective p UCL LCL

 1 0.035 0.05 0.1003 0.0054

 2 0.06 0.05 0.1003 0.0054
 3 0.045 0.05 0.1003 0.0054
 4 0.03 0.05 0.1003 0.0054
 5 0.025 0.05 0.1003 0.0054
 6 0.04 0.05 0.1003 0.0054
 7 0.05 0.05 0.1003 0.0054
 8 0.055 0.05 0.1003 0.0054
 9 0.07 0.05 0.1003 0.0054
10 0.05 0.05 0.1003 0.0054
11 0.045 0.05 0.1003 0.0054
12 0.03 0.05 0.1003 0.0054
13 0.015 0.05 0.1003 0.0054
14 0.01 0.05 0.1003 0.0054
15 0.04 0.05 0.1003 0.0054
16 0.05 0.05 0.1003 0.0054
17 0.06 0.05 0.1003 0.0054
18 0.07 0.05 0.1003 0.0054
19 0.08 0.05 0.1003 0.0054
20 0.075 0.05 0.1003 0.0054
21 0.065 0.05 0.1003 0.0054
22 0.045 0.05 0.1003 0.0054
23 0.05 0.05 0.1003 0.0054
24 0.06 0.05 0.1003 0.0054
25 0.075 0.05 0.1003 0.0054
26 0.07 0.05 0.1003 0.0054
27 0.08 0.05 0.1003 0.0054
28 0.06 0.05 0.1003 0.0054
29 0.075 0.05 0.1003 0.0054
30 0.07 0.05 0.1003 0.0054

The process was above the upper limit during day 19.
Running Head: TEST 6 and HW 19

0.09

0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

Problem 13-06.

The Ambrosia Bakery makes cakes for freezing and subsequent sale. The bakery, which

operates five days a week, 52 weeks a year, can produce cakes at the rate of 116 cakes per

day. The bakery sets up the cake-production operation and produces until a predetermined

number has been produced. When not producing cakes, the bakery uses its personnel

and facilities for producing other bakery items. The setup cost for a production run of

cakes is $700. The cost of holding frozen cakes in storage is $9 per cake per year. The

annual demand for frozen cakes, which is constant over time, is 6000 cakes. Determine the

following:

a. Optimal production run quantity (Q)

b. Total annual inventory costs

Running Head: TEST 6 and HW 20

c. Optimal number of production runs per year

d. Optimal cycle time (time between run starts)

e. Run length in working days.

Answer

a. Optimal production run quantity (Q)

1079.36 cakes

b. Total annual inventory costs

$7782/year

c. Optimal number of production runs per year

5.55 runs/year

d. Optimal cycle time (time between run starts)

46.78 working days

e. Run length in working days

9.30 runs/working day

Problem 13-20.
Southwood Furniture Company is a U.S.-based furniture manufacturer that offshored all

of its actual manufacturing operations to China about a decade ago. It set up a distribution

center in Hong Kong from which the company ships its items to the United States on

container ships. The company learned early on that it could not rely on local Chinese

freight forwarders to arrange for sufficient containers for the company's shipments, so it

contracted to purchase containers from a Taiwanese manufacturer and then sell them to
Running Head: TEST 6 and HW 21

shipping companies at the U.S. ports the containers are shipped to. Southwood needs 715

containers each year. It costs $1200 to hold a container at its distribution center, and it costs

$6000 to receive an order for the containers. Determine the optimal order size, minimum

total annual inventory cost, number of annual orders, and time between orders.

Answer

EOQ = sqrt ((2AO)/c)

=Ssqrt(2*715*6000/1200)
=85 orders

Number of orders = 715/85 = 8 orders

Time between orders = 365/8 = 45 days

Total inventory cost = 715(8) +1200(85/2) = 5720+51000=56720

Reference:
Warschum, M. (2015). A Fresh Look at Online Grocery. ATKearney. Retrieved August 10, 2015
from: https://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/a-fresh-look-
at-online-grocery/10192
Running Head: TEST 6 and HW 22

Unknown (2015). Just In Time - JIT. Investopedia. Retrieved August 11, 2015 from:
http://www.investopedia.com/terms/j/jit.asp