# Operations management fundamentals

Question 1 – (5 marks)

An operation has a 10% scrap rate. As a result, only 82 good pieces per hour are produced. What is the potential increase in labour productivity that could be achieved by eliminating the scrap?

Question 2 – (5 marks)

In chapter 4, the text provided several examples of customer feedback for product design. Provide your opinion on utilizing the customer. No more than ½ page. Note, there is not “right” or “wrong” for this question, It is marked on how well you express your thoughts. Point form is preferred.

Question 3 – (16 marks)

The following table provides monthly sales (\$1000) at a college bookstore. The sales show a seasonal pattern, with the greatest number when the college is in session and decrease during the summer months.

Calculate seasonal factors, then calculate the forecasted sales for July in year 5. In year 5 the expected to be a total of \$3,600,000

M

T

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

1

196

188

192

164

140

120

112

140

160

168

192

200

2

200

188

192

164

140

122

132

144

176

168

196

194

3

196

212

202

180

150

140

156

144

164

186

200

230

4

242

240

196

220

200

192

176

184

204

228

250

260

Question 4 (6 marks)

The utilization of a machine is 50%. The machine has a design capacity of 70 units per hour and an effective capacity of 60 units per hour. Find the efficiency of the machine.

Question 5 (8 marks)

Rachel Hackwood operates a business. She sells sandwiches from a small shop in the center of a busy town. The fixed costs per month, including rent of the premises and advertising total \$600. The average variable cost of producing a sandwich is 50 cents and the average selling price of one sandwich is \$1.50.

Find the break even quantity

How many sandwiches must be sold to obtain a monthly profit of \$1200?

Question 6 (16 marks)

A company plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at \$7 each or to produce them in-house. Either of two processes could be used for in-house production; one would have an annual fixed cost of \$190,000 and a variable cost of \$4 per unit. Determine the range of annual quantity for which each of the alternatives would be best.

Question 7 (4 marks)

The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data:

What is the forecast for this year using the naive approach?
What is the forecast for this year using a three period moving average?

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