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OM 301 Section 004

Homework #1

A. Problem 1.1
Chuck Sox makes wooden boxes in which to ship motorcycles. Chuck and his 3
employees invest a total of 40 hours per day making 120 boxes.

a. What is their productivity?

b. Chuck and his employees have discussed redesigning the process to improve
efficiency. If they increase the rate 125 per day, what will be their productivity?

c. What will be their unit increase in productivity per hour?

d. What will be their percentage change in productivity?

B. Problem 1.3
This year, Donnelly, Inc. will produce 57,600 hot water heaters at its plant in
Delaware, in order to meet expected global demand. To accomplish this, each
laborer at the plant will work 160 hours per month. If labor productivity at the
plant is 0.15 hot water heaters per labor-hour, how many laborers are employed at
the plant?
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C. Problem 1.9
Lillian Fok is President of Lakefront Manufacturing, a producer of bicycle tires.
Fok makes 1000 tires per day with the following resources:

Labor: 400 hours per day @ $12.50 per hour

Raw Materials: 20,000 pounds per day @ $1 per pound
Energy: $5,000 per day
Capital Costs: $10,000 per day

a. What is the labor productivity per labor-hour for these tires at Lakefront
Manufacturing?

b. What is the multifactor productivity for these tires at Lakefront Manufacturing?

c. What is the percent change in multifactor productivity if Fok can reduce the
energy bill by $1000 per day without cutting production or changing any other
inputs?

D. Problem 1.11
Munson Performance Auto Inc. modifies 375 autos per year. The manager, Adam
Manson, is interested in obtaining a measure of overall performance. He has asked
you to provide him with a multifactor measure of last year’s performance as a
benchmark for future comparison. You have assembled the following data:
Resource inputs labor 10,000 hours, 500 suspension and engine modification kits,
and energy 100,000 kilowatt hours. Average labor cost last year was $20 per hour,
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kit costs $1,000 each, and energy $3 per kilowatt-hour. What do you tell Mr.
Manson?

E. Problem 2.9
Ranga Ramasesh is the operations manager for a firm that is trying to decide which
one of four countries it should research for possible outsourcing providers. The first
step is to select a country based on cultural risk factors, which are critical to
eventual business success with the provider. Ranga has reviewed outsourcing
provider directors and found that the hour countries in the table that follows have
an ample number of providers from which they can choose. To the aid in the
country selection spur, he has enlisted the aid of a cultural expert, John Wang, who
has provided ratings of the various criteria in the table. The resulting ratings are on
a 1 to 10 scale, where 1 is a low risk and 10 is a high risk.
John has also determined six criteria weightings: Trust with a weight of a 0.4;
Quality, with 0.2; Religious, with 0.1; Individualism, with 0.1; Time, with 0.1 and
Uncertainty, with 0.1. Using the factor-rating method, which country should Ranga
select?
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F. Problem 2.11
Walker Accounting Software is marketed to small accounting firms throughout the
U.S and Canada. Owner George Walker has decided to outsource the company’s
help desk and is considering three providers: Manila Call Center (Philippines),
Delhi Services (India), and Moscow Bell (Russia). The following table summarizes
the data Walker has assembled. Which outsourcing firm has the best rating?
(Higher weights imply importance and higher ratings imply more desirable
providers)

G. Problem 3.3
Draw the activity-on-node (AON) project network associated with the following
activities for Carl Betterton’s Construction project. How long should it take Carl
and his team to complete this project? What are the critical path activities?
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H. Problem 3.9

a. Refer to table in Problem 3.8. Draw the AON network for construction activity.

I. Problem 3.11
Dave Fletcher (See 3.10) was able to determine the activity times for constructing his
laser scanning machine. Fletcher would like to determine ES, EF, LS, LF and slack
for each activity. The total project completion time and the critical path should also
be determined.
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J. Problem 3.14
Kelle Carpet and Trim installs carpet in commercial offices. Peter Kelle has been
very concerned with the amount of time it took to complete several recent jobs.
Some of his workers are very unreliable. A list of activities and their optimistic
completion time, the most likely completion time, and the pessimistic completion
time (all in days) for a new contract are given in the table.

a. Determine the expected completion time and variance for each activity.
b. Determine the total project completion time and the critical path for the project.
c. Determine ES, EF, LS, LF and slack for each activity.
d. What is the probability that Kelle Carpet and Trim will finish the project in 40
days or less?
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K. Problem 3.20
Development of Version 2.0 of a particular accounting software product is being
considered by Jose Noguera;s technology firm in Baton Rouge. The activities
necessary for the completion of this project are listed in the following table:

a. What is the project completion date?

b. What is the total cost required for completing this project ion the normal time?
c. If you wish to reduce the time required to complete this project by 1 week, which
activity should be crashed, and how much will this increase the cost?
d. What is the maximum time that can be crashed? How much would costs
increase?
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L. 4.1
The following gives the number of pints of type B blood used at Woodlawn Hospital
in the past 6 weeks:

a. Forecast the demand for the week of October 12 using a 3-week moving average.
b. Use a 3-week weighted moving average, with weights of 0.1, 0.3, and 0.6, using
0.6 for the most recent week. Forecast demand for the week of October 12.
c. Compute the forecasting for the week of October 12 using exponential
smoothing with a forecast for August 31 of 360 and α= 0.2.
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M. Problem 4.4
A check-processing center uses exponential smoothing to forecast the number of
incoming checks each month. The number of checks received in June was 40
million, while the forecast was 42 million. A smoothing constant of 0.2 is used.

a. What is the forecast for July?

b. If the center received 45 million checks in July, what should be the forecast in
August?
c. Why might this be an inappropriate forecasting method for this situation?

N. Problem 4.5
The Carbondale Hospital is considering the purchase of a new ambulance. The
decision will rest partly on the anticipated mileage to be driven next year. The miles
driven during the past 5 years are below:
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a. Forecast the mileage for the next year (6th year) using a 2-year moving average.
b. Find the MAD based on the 2-year moving average, (Hint: You will have only 3
years of matched data)
c. Use a weighted 2-year moving average with weights of 0.4 and 0.6 to forecast
next year’s mileage. (The weight of 0.6 is for the most recent year.) What MAD
results from using this approach to forecasting? (Hint: You will have only 3 years
of matched data.)
d. Compute the forecast for year 6 using exponential smoothing, an initial forecast
for year 1 of 3,000 miles, and α= 0.5.
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O. Problem 4.9
Lenovo uses the ZX-81 chip in some of its laptop computers. The prices for the chip
during the past 12 months were as follows:

a. Use a 2-month moving average on all the data and plot the averages and prices.
b. Use a 3-month moving average and add the 3-month plot to the graph created in
part (a).
c. Which is better (using the mean absolute deviation): the 2-month average or the
3-month average?
d. Compute the forecasts for each month using exponential smoothing, with an
initial forecast for January of $1.80. Use α= 0.1, then α= 0.3, and finally α= 0.5.
Using MAD, which α is the best?
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P. Problem 4.18
Consider the following actual (At) and forecast (Ft) demand levels for a commercial
multiline telephone at Office Max:

The first forecast, F1, was derived by observing A1 and setting F1 equal to A1.
Subsquent forecast averages were derived by exponential smoothing. Using the
exponential smoothing method, find the forecast for time period 5. (Hint: You need
to first find the smoothing constant, α)
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Q. Problem 4.23
Sales of quilt covers at Bus Banis’s department store in Carbondale over the past
year are shown below. Management prepared a forecast using a combination of
exponential smoothing and its collective judgment for the 4 months (March, April,
May, and June).

a. Compute MAD and MAPE for management’s technique.

b. Do management’s results outperform (i.e. have smaller MAD and MAPE than) a
naïve forecast?
c. Which forecast do you recommend, based on lower forecast error?