Exam 1 – Review

Chapters 1-7

(this list is not inclusive, but you can use it as a guide)

 

 

Problems:

 

Forecast methods:  Moving Average, Exponential Smoothing, MAD, Weighted Moving Average, Simple Regression Analysis, Linear Trend Analysis

 

Capacity Planning:  Breakeven Point, Breakeven Analysis for alternatives

 

Line Balancing:  Most Following Task Rule, Positional Weight Rule, Longest Task Rule, Cycle Time, Idle Time Percentage, Efficiency

 

Content:

 

Types of Strategic Decisions

Definition and methodology of productivity

Forecasting definitions – pros and cons

Product and service design – standardization pros and cons

Quality Function Deployment definition

Capacity definition and related definitions (utilization, efficiency)

Definitions of processing systems and pros and cons for each

Definitions of layout designs and pros and cons for each (including cellular manufacturing layout)

Definitions: job enlargement, job enrichment, self-directed teams, job rotation

Design of work systems

 

Professor Caire                                                                                              Spring 2004   

 

MGMT 180 – Operations Management

 

Make Up Exam – 1

 

25 points – Pick 1 problem out of the 2

 

 

  1. Jana and Marla, two recent business school graduates, have decided to open their own copy-service business on a part-time basis.  They estimate that their annual fixed costs are $32,000 and their average variable cost for each copy sold at $.03.  They expect their selling price to average $.07 per copy. 

 

    1. What is their breakeven point in dollars?  In number of copies?

 

 

X = FC/ SP-VC = 800,000 copies

 

$ = X(.07) = $56,000

 

 

 

 

    1. After their first year of operations, in which they generated $84,000 in revenues,  Jana and Marla decide to pay themselves each $5,000 per year in salaries.  What do their annual sales have to be in the second year if they want to make the same amount of profit as they did the first year?  (I used $84,000 as profit in class, below is using revenues)

 

TR1 = SP (X) = $84,000 = .07 (X)

X = 1,200,000

TP1=TR1-TC1

TP1=$84,000 - $32,000 -.03 (X) Using X = 1,200,000

TP1= $16,000

TP1=TP2 = TR-TC

16,000 = X(.07) – 42,000 - .03 (X)

X = 1,450,000

SP= (1,450,000)(.07) = $101,500

 

c.    Instead of paying themselves $5000 each, they decide to hire a temporary   helper so that they can each take on secondary jobs.  The temporary worker would cost them $15,000 for the same period and a VC = $.02..   If they were to sell 1,500,000 copies,  which alternative should they use?   What is the breakeven between the two? 

 

            X = FCb – FCa/ Vca – VCb = 1,500,000 

 

            Using 1,500,000           Tca = $77,000

                                                TCb = $77,000

           

            Each gives the same result – either of the two works.