Operations management

Individual Assignment 3: Chapter 5 and Chapter 6

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Chapter 5
1) If ABAC want to build a new campus due to increasing number of students, what would be the key factors for
selecting a new location. Please specify 3 factors and explain how each of them is important.
Solution
Solution will vary. Anyway, some key factors might be as follows:
No. Factors Importance
1 Transportation/Accessibility Convenient for students to access
2 Community around campus Image of university and safety concern
3 Land cost Capital savings

2) A firm is considering two location alternatives. At location A, fixed cost would be $40,000 per month, and
variable costs $3.0 per unit. At alternative B, fixed cost would be $36,000 per month, with variable costs of
$3.5 per unit. At alternative C, fixed cost would be $32,000 per month, with variable costs of $5.0 per unit.
Identify the area that has the minimum total cost per month. If monthly demand is expected to be 5,000 units,
which plant offers the lowest total cost?

Q1: Total Cost of B =Total cost of C

36,000 + 3.5Q1 = 32,000 + 5.0Q1

36,000 – 32,000 = 5.0Q1 -3.5Q1
4,000 = 1.5Q1
Therefore, Q1 = 4,000 / 1.5 = 2,667

Q2: Total Cost of A =Total cost of B

40,000 + 3.0Q2 = 36,000 + 3.5Q2

40,000 – 36,000 = 3.5Q2 -3.0Q2
4,000 = 0.5Q2
Therefore, Q2 = 4,000 / 0.5 = 8,000

For a quantity of 5,000 units/month, location B is the best choice.

3) A full-service restaurant is considering opening a new facility in a specific city. The table below shows its
rating of four factors at each of three potential sites.
Factor Weight Score of each potential site
Asoke Thong Lor Nana
Affluence of local population 0.20 35 30 20
Traffic Flow 0.40 50 20 40
Parking availability 0.20 30 40 40
Growth Potential 0.20 10 30 30
Calculate the total weight-score of each site. What is best site?

Solution

Score of each potential Weigh-Score of each

site potential site
Factor Weight
Thong Thong
Asoke Nana Asoke Nana
Lor Lor
Affluence of local population 0.2 35 30 20 7.00 6.00 4
Traffic Flow 0.4 50 20 40 20.00 8.00 16
Parking availability 0.2 30 40 40 6.00 8.00 8
Growth Potential 0.2 10 30 30 2.00 6.00 6
Total 35.00 28.00 34.00

Asoke is the best choice.

4) A firm is studying a plan to set up new warehouse to serve five department stores (S1,S2,S3,S4,S5). All stores
location (in x, y coordinates) and demand required per month are as follows:
Store x, y coordinates Monthly Delivery (Units)
S1 5, 10 2,000
S2 6, 2 5,000
S3 1, 15 1,500
S4 9, 2 10,000
S5 12, 12 6,000
Determine the best location (x, y coordinate) for this new warehouse by using CG method.

Solution

Monthly Delivery
Store x coordinates y coordinates x*Q y*Q
(Units)

S1 5 10 2,000 10,000 20,000

S2 6 2 5,000 30,000 10,000
S3 1 15 1,500 1,500 22,500
S4 9 2 10,000 90,000 20,000
S5 12 12 6,000 72,000 72,000
Total 24,500 203,500 144,500

X bar = 203,500 / 24,500 = 8.31

Y bar = 144,500 / 24,500 = 5.90
Therefore, best location is (8.31,5.90)
Chapter 6

5) The management of a factory is going to erect a maintenance building with a connecting electrical generator
and water tank. The activities, activity descriptions, and estimated durations are given in the following table:

Activity Description Activity Predecessor Activity Duration (Weeks)

a Excavate - 2
b Erect building a 6
c Install generator a 4
d Install tank a 2
e Install maintenance equipment b 4
f Connect generator and tank to b, c, d 5
building
g Paint on a finish b 3
h Check out facility e, f 2
Construct the network for this project, identify the critical path, and determine the project duration time. Also,
determine ES, EF, LS, LF, and Slack of each activity.

Solution

Critical path = a-b-f-h = 15 weeks

6) The Horizon Aircraft Company is preparing a contract proposal to submit to the Global Airlines Company for
a new commercial aircraft, the JK60. Part of the proposal is a development and production schedule for
completion of the first aircraft. The project consists of three primary categories: (1) engine design and
development; (2) development and production of the airframe (e.g. the aircraft body); and (3) the design and
development of the aircraft avionics (e.g. the electronic systems, equipment, and other devices used to operate
and control the aircraft). Following is a table listing the project activities with time estimates (in months);

Activity Description Activity Predecessor Time Estimates (Months)

1 General Design - 6 10 24
2 Design Engines - 20 35 60
3 Airframe design 1 5 17 33
4 Avionics design 1 2 8 21
5 Develop test engine 2 6 9 15
6 Develop test airframe 3 7 12 17
7 Develop interim avionics 4 6 16 27
8 Engine development 2 18 25 42
9 Assemble test aircraft 5,6,7 5 8 11
10 Test avionics 4 4 11 16
11 Engine/airframe flight trials 9 5 10 13
12 Avionics flight trials 10 5 9 26
13 Engine production 8 10 15 18
14 Airframe production 11 11 14 21
15 Avionics production 11,12 12 16 26
16 Final assembly/Finish 13,14,15 3 5 6

Develop the project network, and determine the critical path, the expected project duration, and variance.
What is the probability the project will be completed within eight years (or 96 months)?

Solution (Apply 2 decimal digits)

Activity a m b t 
1 6 10 24 11.67 9.00
2 20 35 60 36.67 44.44
3 5 17 33 17.67 21.78
4 2 8 21 9.17 10.03
5 6 9 15 9.50 2.25
6 7 12 17 12.00 2.78
7 6 16 27 16.17 12.25
8 18 25 42 26.67 16.00
9 5 8 11 8.00 1.00
10 4 11 16 10.67 4.00
11 5 10 13 9.67 1.78
12 5 9 26 11.17 12.25
13 10 15 18 14.67 1.78
14 11 14 21 14.67 2.78
15 12 16 26 17.00 5.44
16 3 5 6 4.83 0.25
Critical path = 2-5-9-11-15-16
Project completion time = 85.67 months
Project variance = 44.44 + 2.25 + 1.00 + 1.78 + 5.44 + 0.25 = 55.16
Therefore,  = 7.43
Z = (96 – 85.67) / 7.43 = 1.39 → Area = 0.4177
P(x<=96) = 0.5 + 0.4177 = 0.9177 or 91.77%