Operations Management

Homework Assignment 1
1. 80/(1-0.8)=100 pieces per hour without scrap.
The increase is (100-80)/80 = 25%
2.
a. 80 customers/(5 employee * 8 hours =40 labor hours) = 2 customer per labor hour.
b. 80 customers/$(5*8*9+80*0.5) = 80 customers / $400 = 0.2 customers per $ value
3
a. 22
b. (18+21+22)/3= 20.33
c. 19.28

alpha 0.2
week 1 2 3 4 5 6
A 17 22 18 21 22
F 17 18 18 18.6 19.28 <--Exp
e 5 0 3 3.4

4. 2004 4Q is t=0. Then t=1 in 2005 1Q, t=2 in 2005 2Q, … t=5 in 2006 1Q, and so on. In 2007 3Q, t=11, and
in 2007 4Q t=12.
First, find the trend portion using the equation. 𝑇𝑟𝑒𝑛𝑑11 = 40 − 6.5(11) + 2(11)2 = 210.5 . Similarly, you can
find T_12=250.
Then, apply the quarter relatives.
F_11=210.5*0.6= 126.3
F_12=250*1.3=325
5.
Forecast1 Forecast2
Month sales Forecast e |e| e^2 |e|/A*100 Forecast2 e |e| e^2 |e|/A*100
1 77 75 2 2 4 2.597% 71 6 6 36 7.79%
2 75 71 4 4 16 5.333% 75 0 0 0 0.00%
3 78 82 -4 4 16 5.128% 80 -2 2 4 2.56%
4 76 75 1 1 1 1.316% 74 2 2 4 2.63%
5 71 73 -2 2 4 2.817% 73 -2 2 4 2.82%
6 70 72 -2 2 4 2.857% 71 -1 1 1 1.43%
7 75 77 -2 2 4 2.667% 77 -2 2 4 2.67%
8 78 79 -1 1 1 1.282% 74 4 4 16 5.13%
9 80 80 0 0 0 0.000% 78 2 2 4 2.50%
10 75 73 2 2 4 2.667% 76 -1 1 1 1.33%
sum -2 20 54 26.664% 6 22 74 28.86%
avg -0.200 2.000 6.000 2.666% 0.6 2.2 8.222 2.89%
MAD MSE MAPE MAD MSE MAPE
 Operations Management

Forecast1 Forecast2
MAD 2.00 2.20
MSE 6.00 8.22
MAPE 2.67% 2.89%
z 2 2
s 2.45 2.87
LCL -4.90 -5.73
UCL 4.90 5.73

Forecast #1 is better because it has less MSE, MAD, and MAPE

Forecast #1: All errors are within the limits
Forecast #2: The error for month 1 exceeds the limits, the forecast is not in control.
(Optional: Maybe we need to think about the cycle or trend but we do not have enough observations to identify
a pattern.)

6. Effective capacity = .5 (Design capacity), Actual output = .8 (Effective capacity),

Actual output = (.5)(.8)(Design capacity) = (.4)(Design capacity)
Actual output = 12 units = (.4)(Design capacity)
Design capacity = 12/(.4) = 30 units jobs

7. For Q < 63,333: Vendor. For Q>63,333: In-house

Cost

In-house

Vendor

63333 Q
 Operations Management

8. a. R = $45 per customer, v = $20 per customer.

FC Range QBEP=FC/(R-v)
One machine $2,300 1 to 100 2300/(45-20) = 92
Two machines $3,800 101 to 200 3800/(45-20) = 152

b. Since BEP for 1 machine is 92 and 92 < 95 and BEP for 2 machines is 152 > 120, we should purchase
1 machine, because even at the upper limit (120) we have not reached the break-even point associated
with two machines.
9. a. Cycle time = 56 min/4 unit = 14 min/unit

Task # of followers Positional weight

a 4 22
b 3 19
c 2 17
d 3 25
e 2 18
f 4 29
g 3 24
h 1 14
i 0 5

Revised
Time Sequence Enough Assign time
Station remaining ? time? (task time) remaining Idle
1 14 a, d, f a, d, f f (5) 9
9 a, d, g a, d, g a (3) 6
6 b, d, g b, g g (6) 0 0
2 14 b, d b, d d (7) 7
7 b, e b, e b (2) 5
5 c, e c, e e (4) 1
1 c - - 1 1
3 14 c c c (3) 11
11 h h h (9) 2
2 i - - 2 2
4 14 i i i (5) 9
0 - - - 9 9
12 min

a. Efficiency = 1 – percent idle time = 1 – (idle time per cycle) / (N*CT)

= 1 – 12/(4*14) = 78.57%
 Operations Management

LP exercise

Let x1 = qty. ham spread, x2 = qty. deli spread

Objective: a. min 3x1 + 3x2 (cost)

b. max 2x1+ 4x2 (profit),
Subject to
mayo 1.4x1 + .1.0x2  70 kg.
mayo 1.4x1 + 1.0x2  112 kg.
ham x1  20 pans
deli x2  21 pans

a. x1 = 35, x2 = 21, Cost = $168

b. x1 = 20, x2 = 84, Profit = $376
x2

112

maximization
70

mayo = 70

mayo = 112
minimization
21

x1
0
20 50 80