Operations Management Project

Question #1 (10 points) Southern Hospital Supplies, a company that makes hospital gowns, is considering capacity expansion. The new facility would produce a new type of gown, and currently the potential or marketability for this product is unknown. If a large plant is built and a favorable market exists, a profit of $100,000 could be realized. An unfavorable market would yield a $90,000 loss. However, a medium plant would earn a $60,000 profit with a favorable market. A $10,000 loss would result from an unfavorable market. A small plant, on the other hand, would return $40,000 with favorable market conditions and lose only $5,000 in an unfavorable market. Of course, there is always the option of doing nothing. Recent market research indicates that there is a .4 probability of a favorable market, which means that there is also a .6 probability of an unfavorable market.

With this information, please use the decision tree technique to select the alternative that will result in the highest expected monetary value.

Question #2 (10 points) Management wants to design an assembly line that will turn out 800 videotapes per day. There will be eight working hours in each day. The industrial engineering staff has assembled the information below:

1. Determine the optimum cycle time (i.e., actual operating time/desired output).

2. What is the minimum number of stations needed?

3. Assign tasks to work stations.

4. What is the efficiency of this assembly line?

Question #3 (10 points) Four samples of three observations each have been taken, with actual measurements (in centimeters) shown below. Construct x bar and R charts, and determine if the production process is under control.

Question #4 (10 points) John has been asked to determine whether the $22.50 cost of tickets for the community dinner theater will allow the group to achieve break-even and whether the 175 seating capacity is adequate. The cost for each performance of a 10-performance run is $2,500. The facility rental cost for the entire 10 performances is $10,000. Drinks and parking are extra charges and have their own price and variable costs, as shown below:

Will the theatre break even?

Question #5 (10 points) Attendance at Los Angeles’s newest Disneylike attraction, Vacation World, has been as follows:

Compute seasonal indices using all of the data.

Question #6 (10 points) Consider the following transportation decision-making information:

Cost to ship from plant to store (per unit of demand)

1. Develop the following shipping assignment table that uses the Solver function to find the optimal shipping patterns between the plants and the stores.

1. What is the minimal shipping cost?

Question #7 (10 points) The annual demand for an item is 10,000 units. The cost to process an order is $75 and the annual inventory holding cost is 20% of item cost. What is the optimal order quantity, given the following price breaks for purchasing the item? What price should the firm pay per unit? What is the total annual cost at the optimal behavior?

Question #8 (10 points) The MGT 504 course introduces you to basic Operations Management concepts and their implementations. I cannot hope to detail each concept. My goal here is to make you aware of as many concepts as possible in order to prepare you for many varied career pursuits, so you may have a moment of clarity in your daily work, “Oh yes, we touched on that in Operations Management” and with that you have a stepping stone to exploring the concept in depth.

Could you find any potential applications of OM concepts or skills to your daily work or personal life? Please give me some details.