SupplyChainAndOperation

Part II. Answer the four quantitative questions in the space provided. You must show your calculations to obtain full marks.

4. A production manager needs to select a production-planning strategy. Use the following information to answer questions a and b.

The cost of buying a unit from a subcontractor costs 50$ per unit. Hiring costs 10$ per unit increase in production and firing costs 20$ per unit reduction in production. Workers earn 2000$/month and produce 50 units/month. There are 25 working days/month. Inventory costs are 10$/unit/month.

Following is the demand for the planning period: Month 1: 200 units, Month 2: 400 units, Month 3: 300 units, and Month 4: 100 units.

1. Determine the estimated production cost for the inventory and subcontracting strategies, and make a suggestion for the production manager.[5 marks]

1. If the company is following a differentiation strategy, discuss if this would influence your recommendation of part a)? [1 mark]

5. Suppose a production line needs to produce 120 units per day and there are 24 production hours available per day. The tasks to produce the products are in the table below.

a) Balance the line using the rule of the shortest processing time? [5 marks]

b) For which type of layout is the line balancing technique important, and why? [1 mark]

6.A company has decided to replace their workers with more experienced workers to improve productivity. Last year, the 6 workers serviced 120 customers, and the each earned 120,000 AED per year. The new 5 workers are expected to service 150 customers but they each earn 140,000 AED per year. Compare the productivity of both years and explain if the new strategy is worth it? [6 marks]

7. Suppose a bank needs to follow the four steps belowin order to issue a credit card.

Step 1: Obtain customer information (30 min)

Step 2: Verify credit history (20 min)

Step 3: Verify credit limit (10 min)

Step 4: Issue card (20 min)

Suppose step 1 is done first, then step 2 and 3 can be done at the same time, and step 4 is done at the end.

1. Determine the throughput time and the bottleneck time in this process. [3 marks]

2. Estimate the capacity of the bank to issue credit cards each week if there are 7 working days per week, and 10 hours available per day. [3 marks]

Final Exam Formula Sheet

Ch.1 Productivity

Productivity = output / input, where input = management costs

Ch. 7: Capacity

Utilization = output / design capacity

Efficiency = output / effective capacity

Capacity estimation: time available / bottleneck time

Ch. 9: Layout

Cycle time: time available / demand