MBA703 Operations

MBA703 Operations Midterm Exam

(Instructions on page 2)

Q	Name	Type	Pts Possible	Pts earned
Table of Contents Toggle 1	Fantastic Furniture	Inventory	60
2	Carolina Dentistry	Process Analysis	40
3	Kenan Stadium Concessions	Inventory	20
4	Multiple Choice	Miscellaneous concept	80
			200

 

Name ________________________________________________        Section: _________________

 

Date: _________________________________________________       

 

Start Time: __________________   End Time: __________________ (Max 3 hours)

 

Instructions – PLEASE READ

 

GENERAL

1. If you feel that a question is ambiguous or missing some information, please state your assumptions and proceed.  Your assumptions could be considered when evaluating your responses, if they are valid and warranted.
2. This exam is open book and open notes. This includes all LMS content.
3. You have 3 hours to take this exam.  Please choose a time when you will be able to work on the exam for a single block of 3 hours, and do not read the exam before you begin working on it.  Your allotted time starts when you download the exam file.
4. There are 200 total possible points on 12 pages (including these two pages).
5. You are welcome to use blank sheets if you need more space, and re-number your pages for scanned submission at the end.

 

WHAT TO SUBMIT (and what not to).

1. Please show all calculations. i.e. label and state your parameter values, show the formulas and intermediate values (e.g. the z value for any inventory problem, even though that is not specifically asked for).
2. If you use Excel, you will still need to write out your answers in this exam booklet, explaining what you have calculated, and why.  Specifically, please label and show all parameter values and intermediate calculations. 
3. Do not submit your Excel file. If you wish to share any charts or tables you may have generated in Excel related to QII, print and scan those sheets and upload as one single PDF or copy and paste the graphs and tables in the WORD document, explaining your steps.
4. Please scan and upload the exam as a PDF, if possible, OR You may also upload a Microsoft Word document.
5. Make sure all pages exist and are legible before you upload your exam file.
6. Exam files must be uploaded to the LMS no later than 10:00 PM (Eastern Time) on Thursday of Week 5.
7. In an emergency, you may take photos of each page with a cellphone camera and make a pdf file with them.  Make sure to email your section instructor with a fully legible copy as soon as you have access to a printer.

 

GOOD LUCK!

 

 

Question 1 (60 points)

 

Joe Johnson, the Inventory Manager at Fantastic Furniture, Inc. is responsible for managing the inventory of coffee tables. Joe isn’t talkative about his inventory but you have managed to extract the following information from him:

It costs $25 to place an order. Each coffee table costs $75.00. Annual holding costs are 30% of item value. Average daily demand is 32 coffee tables. Standard deviation of daily demand is 7 coffee tables. Lead time to receive a coffee table from a supplier is 3 days. Service level is 90%. Fantastic Furniture, Inc. is open 5 days a week, 52 weeks a year.

1. Please help Joe out by computing the optimum order quantity, reorder point and the associated total annual cost for managing the inventory of coffee tables (exclude the cost of purchasing the tables). Round EOQ and ROP answers to 0 decimal places and TC answer to 2 decimal places.  (20 points)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EOQ:  ____________________________________

 

ROP:  ____________________________________

 

TC:     ____________________________________

1. Joe’s supervisor, Tara, believes that the service level should be 95% rather than 90% and wants Joe to recalculate the order quantity, reorder point, and the associated annual total cost of managing coffee table inventory. Please tell Joe what the values at 95% would be AND what, if any, the difference in annual total cost would be.  Round EOQ and ROP answers to 0 decimal places and TC answer to 2 decimal places.  (20 points)

 

 

 

 

 

 

 

 

 

 

 

 

 

EOQ:  ____________________________________

 

ROP:  ____________________________________

 

TC:     ____________________________________

 

TC Difference:     ____________________________________

1. Instead of following his boss’s suggestion, Joe decides to increase the safety stock by an additional 50% (new safety stock is 150% of safety stock calculated in (a)). What is the probability of stocking out with this new safety stock setting?  Round probability as a % to 2 decimal places, e.g., x.xx%  (20 points)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Probability of stocking out:  __________________________________%__

 

 

Question 2 (40 points)

 

Carolina Dentistry provides professional dental care in downtown Raleigh. There are currently several proposals to expand the capacity of the dental office for which it is necessary to calculate the current capacity. Following are the main resources at the office:

 

Resources	Number
Front Desk Clerk	2
Waiting Room	1
Hygienist	8
Dentist	3

 

• The front desk clerk checks all patients in, verifies their personal information, and checks for dental insurance (an average of 4 min/patient). At the end of the visit, the clerk will also check out each patient by preparing a bill and receiving payment (an average of 2 min/patient).
• All patients then enter the waiting room (before being seen by a dentist or hygienist) where the average wait time is 15 minutes. The waiting room has 6 chairs and can accommodate up to 6 patients.
• On average 75% of the patients require only dental cleaning (an average of 35 min/patient), which can only be handled by a hygienist.
• Of the remaining 25% of the patients, 30% come for only consultation (an average of 20 min/patient), 40% require only an operation (an average of 40 min/patient) while remaining 30% require both a consultation and an operation (an average of 60 min/patient). Only the dentist can handle consultations and operations.

 

Based on the above information, please answer the following questions:

 

 

 

1. What is the capacity of each of the four resources at the dental office (front desk clerk, waiting room, hygienist and dentist) in total number of patient arrivals per hour?   Round answer to 1 decimal place.  (24 points)

 

 

 

 

 

 

 

 

 

 

 

 

Capacity – front desk clerk:  ____________________________________

Capacity – waiting room:  ____________________________________

Capacity – hygienist:  ____________________________________

Capacity – dentist:  ____________________________________

 

1. What is the system capacity in total number of patient arrivals per hour? Which resource(s) is (are) the bottleneck(s)? (8 points)

 

 

 

 

 

 

 

System Capacity:  ____________________________________

 

Bottleneck:  ____________________________________

 

 

1. One of the proposals to increase capacity is to hire one more dentist. If implemented, explain how this would affect the system capacity. Would this change the existing bottleneck? If yes, which is (are) the new bottleneck(s)? (8 points)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New System Capacity:  ____________________________________

 

Change Bottleneck (Yes/No):  ____________________________________

 

New Bottleneck (If Yes):  ____________________________________

 

 

Question 3 (20 points)

 

As the Director of Concessions at Kenan Stadium, Adrian is responsible for ordering items for the concession stands to ensure there is sufficient supply for game day.  Past experience suggests he can assume game day demand for hot dogs follows a normal distribution with an average of 18,000 and a standard deviation of 400.

 

The concession stands sell hot dogs to fans for $5.50.  The price of the hot dog is $0.50 each and the cost of buns cost $0.18 each.  There is associated miscellaneous cost of $0.32 for each hot dog that’s sold (condiments, napkins, etc.).  Hot dog buns that aren’t sold can be returned to the supplier for a credit of $0.04 each.  There is no opportunity to return the unsold hot dogs.

 

1. Based on the information above, what is the optimal number of hot dogs (and buns) Adrian should purchase for each home game? (20 points)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of hot dogs (and buns) to purchase:  ______________________________________

 

 

 

Multiple Choice questions (10 questions @ 8 points each – total of 80 points)

Clearly circle the letter of the best answer

 

 

1. The capacity of a system is determined by
   1. Utilization
   2. How smart the management is
   3. Stock price
   4. Bottleneck
   5. The degree of training employees receive

 

2. Which of the following assumptions is TRUE about the EOQ model?
   1. Constant demand rate
   2. Demand can be unmet
   3. There is no fixed cost for order placement
   4. It allows stock-out and there is a penalty cost for it
   5. All above answers are TRUE about the EOQ model

 

3. Assuming a replenishment system for a product that has varying demand, a reduction in order lead time will affect all of the following EXCEPT
   1. The order quantity
   2. The amount of safety stock
   3. The reorder point
   4. The total annual inventory cost

 

1. If ordering cost increased by a factor of four, the EOQ would:
   1. Increase by a factor of four
   2. Decrease by a factor of four
   3. Increase by a factor two
   4. Decrease by a factor two
   5. None of the above

 

 

1. For a single-server queuing model (this is the model discussed in the asynch and synch material), in order for the system to be stable, the utilization factor, λ/μ, has to be:

 

1. 1. Less than 1
   2. Equal to 1
   3. Greater than 1
   4. Greater than or equal to 1

 

1. Patients walk-in to a doctor’s office, on the average, every 15 minutes with a standard deviation of 15 minutes.  The average examination time is 10 minutes with 5 minutes standard deviation.  The doctor’s utilization is:

 

1. 150%
2. 33%
3. 50%
4. 67%
5. unable to determine based on the data provided

 

1. Safety stock exists for which of the following reasons?

 

1. To allow less expensive purchases by buying more at a discounted rate
2. To allow for transportation time
3. To provide protection against the uncertainties of supply and demand
4. All of the above
5. None of the above

 

8. A sommelier at a fine restaurant keeps a cellar of wine with an average of 800 bottles of wine at any time. The restaurant sells 25 bottles of wine on average any given day. What is the average number of days a wine bottle is held in the cellar?

 

1. 10 days
2. 20 days
3. 32 days
4. 50 days

 

 

1. Capacity is defined as the:

 

1. Maximum capability to produce
2. Minimum capability to produce
3. Average capability to produce
4. None of the above

 

1. A shuttle bus takes a fixed 40 minutes to travel from Long Beach Downtown to LAX (or back), exclusive of time required for passengers to embark / debark. The bus can seat up to 30 passengers, with no standing allowed. Every commuter takes 30 seconds to board and 30 seconds to disembark. The bus is used to travel in both directions.  What is the capacity of the bus in passengers per hour?

 

1. 42
2. 30
3. 7
4. 60

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