Professional Documents
Culture Documents
A newly formed firm must decide on a plant location. There are two alternatives under consideration:
locate near the major raw materials or locate near the major customers. Locating near the raw materials
will result in lower fixed and variable costs than locating near the market, but the owners believe there
would be a loss in sales volume because customers tend to favor local suppliers. Revenue per unit will
be $187 in either case.
Using the above information, determine which location would produce the greater profit. (Omit the "$"
sign in your response.)
Omaha
395750
Problem 8-3
A small producer of machine tools wants to move to a larger building, and has identified two alternatives.
Location A has annual fixed costs of $130,000 and variable costs of $10,000 per unit; location B has
annual fixed costs of $330,000 and variable costs of $8,000 per unit. The finished items sell for $12,000
each.
a. At what volume of output would the two locations have the same total cost?
Volume of output
100
units
Range of output
0 to
100
Range of output
100
or more
Problem 8-4
A company that produces pleasure boats has decided to expand one of its lines. Current facilities are
insufficient to handle the increased workload, so the company is considering three alternatives, A (new
location), B (subcontract), and C (expand existing facilities).
Alternative A would involve substantial fixed costs but relatively low variable costs: fixed costs would
be $255,000 per year, and variable costs would be $540 per boat. Subcontracting would involve a cost
per boat of $2,540, and expansion would require an annual fixed cost of $59,000 and a variable cost of
$1,060 per boat.
a. Find the range of output for each alternative that would yield the lowest total cost. (Leave no cells
blank - be certain to enter "0" wherever required. Round your answers to the nearest whole
number.)
377
or
more
to
40
40
to
377
b. Which alternative would yield the lowest total cost for an expected annual volume of 340 boats?
A
B
C
Problem 8-9
Location Score
Factor
(100 points each)
Convenience
Parking facilities
Display area
Shopper traffic
Operating costs
Neighborhood
Weight
.15
.20
.18
.27
.10
.10
A
86
78
90
91
98
88
B
85
78
89
92
95
91
C
78
92
90
85
90
85
1.00
a. Using the above factor ratings, calculate the composite score for each location. (Do not round
intermediate calculations. Round your final answers to 2 decimal places.)
Location
Composite Score
87.87
87.81
86.75
b. Determine which location alternative (A, B, or C) should be chosen on the basis of maximum
composite score.
A
B
C
Problem 8-12
A toy manufacturer produces toys in five locations throughout the country. Raw materials (primarily
barrels of powdered plastic) will be shipped from a new, centralized warehouse whose location is to be
determined. The monthly quantities to be shipped to each location are the same. A coordinate system
has been established, and the coordinates of each location have been determined as shown. Determine
the coordinates of the centralized warehouse. (Round and to 1 decimal place and optimal points
to the nearest whole number.)
(x,y)
7,7
8,3
6,6
4,1
6,3
Location
A
B
C
D
E
6.2
).
Problem 8-13
A clothing manufacturer produces womens clothes at four locations in Mexico. Relative locations have
been determined, as shown in the table below. The location of a central shipping point for bolts of cloth
must now be determined. Weekly quantities to be shipped to each location are also shown in the table.
Determine the coordinates of the location that will minimize distribution costs. (Round and to 1
decimal place and optimal points to the nearest whole number.)
Location
A
B
C
D
6.1
(x,y)
4,7
6,9
4,9
9,5
, =
7.3
Weekly
Quantity
15
20
25
30
).
Concept Check
1.
What considerations determine the flexibility of the equipment used to create the product?
The product itself, the product variety, and the volume of the demand
2.
Why is it expensive to shut down a continuous process?
product.
fixed-position.
mass.
unit.
rotation.
elimination.
1.
If this new product is a low volume item with a large cost of passing along defective products,
what inspection plan would you recommend?
Intensive inspection
Intensive inspection
2.
Why should Jim Peterson collect the mean and range data for each sample rather than just the
mean measurements?
The range data allows process variability changes to be seen.
The range data allow s process variability changes to be seen.
3.
What might a higher frequency of sampling detect that a lower frequency of sampling might miss?
For example, what might sampling every 30 minutes detect that might be missed if samples are
taken every 4 hours?
High frequency fluctuations in the process.
High frequency fluctuations in the process.
4.
The oven process is charted, no points fall outside the control limits, and run tests do not indicate
anything special, so:
The process is stable.
The process is stable.
5.
Michelle would also like to monitor the percentage of items coming out of the oven that display
unacceptable surface cracking. Which chart should she use?
p-chart
p-chart
6.
The oven is a costly, irreversible process. In which place would you recommend inspection be
done?
Before the oven to ensure good parts are going into the oven
Before the oven to ensure good parts are going into the oven
7.
Michelle would like to improve the oven process; which do you recommend?
Add a sensor to alert the workers when the items have reached the proper temperature so that
they may remove the items promptly.
Add a sensor to alert the w orkers w hen the items have reached the proper temperature so that they may remove the items promptly.
1.
Which of the following sample sizes has the most narrow sampling distribution?
800
800
2.
In which step of the control process are the characteristics defined?
Define
Define
3.
When plotting sample statistics on a control chart, 99.7% of the sample statistic values are
expected to fall within plus/minus how many sigma?
3
3
4.
We measure the following values: 100, 90, 110. What is the range?
20
20
5.
A customer has specified that a tolerance of 10 to 20 mm is acceptable. Our process has a
standard deviation of 2 mm. What is the Cp?
0.833
0.833
6.
p-bar is 0.1, n = 20. What is sigma?
0.067
Problem 10-1
Specifications for a part for a DVD player state that the part should weigh between 25.3 and 26.3
ounces. The process that produces the parts has a mean of 25.8 ounces and a standard deviation of .26
ounce. The distribution of output is normal. Use Table-A.
a. What percentage of parts will not meet the weight specs? (Round your "z" value and final answer
to 2 decimal places. Omit the "%" sign in your response.)
5.46
Percentage of parts
b. Within what values will 99.74 percent of sample means of this process fall, if samples of n = 9 are
taken and the process is in control (random)? (Round your answers to 2 decimal places.)
Lower value
25.54
, Upper value
26.06
Problem 10-2
An automatic filling machine is used to fill 1-liter bottles of cola. The machines output is approximately
normal with a mean of .91 liter and a standard deviation of .04 liter. Output is monitored using means of
samples of 26 observations. Use Table-A.
a. Determine upper and lower control limits that will include roughly 97 percent of the sample means
when the process is in control. (Do not round intermediate calculations. Round your answers to
4 decimal places.)
.9270
.8930
liter
liter
b. Given these sample means: 1.005, 1.001, .998, 1.002, .995, and .999, is the process in control?
Yes
No
Problem 10-5
Using samples of 190 credit card statements, an auditor found the following:
Use Table-A.
Sample
Number with errors
1
4
2
2
3
6
4
8
a. Determine the fraction defective in each sample. (Round your answers to 4 decimal places.)
Sample
Fraction defective
.0211
.0105
.0316
.0421
b. If the true fraction defective for this process is unknown, what is your estimate of it? (Round your
answer to 1 decimal place. Omit the "%" sign in your response.)
2.6
Estimate
c. What is your estimate of the mean and standard deviation of the sampling distribution of fractions
defective for samples of this size? (Round your intermediate calculations and final answers to 4
decimal places.)
Mean
.0263
Standard deviation
.0116
d. What control limits would give an alpha risk of .03 for this process? (Round your intermediate
calculations to 4 decimal places. Round your "z" value to 2 decimal places and other answers
to 4 decimal places.)
z=
2.17
.0011
to
.0515
e. What alpha risk would control limits of .047 and .006 provide? (Round your intermediate
calculations to 4 decimal places. Round your "z" value to 2 decimal places and "alpha risk"
value to 4 decimal places.)
z=
1.78
, alpha risk =
.8233
g. Suppose that the long-term fraction defective of the process is known to be 2 percent. What are the
values of the mean and standard deviation of the sampling distribution? (Round your intermediate
calculations and final answers to 2 decimal places.)
Mean
.02
Standard deviation
.01
h. Construct a control chart for the process, assuming a fraction defective of 2 percent, using two-sigma
control limits. Is the process in control?
Yes
No
Problem 10-7
The postmaster of a small western town receives a certain number of complaints each day about mail
delivery.
Number of complaints
1 2 3
4 10 14
4
8
5
9
6
6
DAY
7 8 9 10 11 12 13 14
5 13 13 7 6 4 2 9
a. Determine three-sigma control limits using the above data. (Round your intermediate calculations
to 4 decimal places and final answers to 3 decimal places. Leave no cells blank - be certain to
enter "0" wherever required. Round up any negative control limit value to zero.)
UCL
16.266
LCL
No