Operations Managemen

Assignment – II
Total Marks: 100

1. Product X is made of two units of Y and three units of Z. Y is made of one unit of
A and two units of B. Z is made of two units of A and four units of C.
Lead time for X is one week; Y, two weeks; Z, three weeks; A, two weeks; B, one
week; and C, three weeks.
a. Draw the bill of materials (product structure tree).
b. If 100 units of X are needed in week 10, develop a planning schedule
showing when each item should be ordered and in what quantity?
(3 + 17 Marks)
2. The Cadbury Candy Company makes a variety of candies in three factories
worldwide. Its line of chocolate candies exhibits a highly seasonal demand
pattern, with peaks during the winter months (for the holiday season and
Valentine’s Day) and valleys during the summer months (when chocolate tends to
melt and customers are watching their weight). Given the following costs and
quarterly sales forecasts, determine whether a level production or chase
production strategy would more economically meet the demand for chocolate
candies:

QUARTER SALES FORECAST(POUNDS)

Spring 80,000
Summer 50,000
Fall 120,000
Winter 150,000

Hiring cost = $100 per worker

Firing cost = $ 500 per worker
Inventory carrying cost= $ 0.50 per pond per quarter
Production per employee = 1000 pounds per quarter
Beginning workforce= 100 workers (10+ 10) marks

3. Daily demand for a product is 60 units with a standard deviation of 10 units. The
review period is 10 days, and lead time is 2 days. At the time of review there are
100 units in stock. If 98% service probability id desired, how many units should
be ordered? (10 Marks)

4. Item X is a standard item stocked in a company’s inventory of component parts.

Each year the firm on random basis uses about 2000 of item X, which costs $25
each. Storage costs, which include insurance and cost of capital, amount to $5 per
unit of average inventory. Every item an order is placed for more item X, it costs
$10.
a. Whenever item X is ordered, what should be the order size? (5 marks)

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b. What is the annual cost for ordering item X? (3 marks)
c. What is the annual cost of storing item X? (2 marks)

5. What you understand by waste in JIT philosophy? What are prominent types of
waste those should be eliminated? Name seven elements that address elimination of
waste. (2+4+4 marks)

6. A local hospital wants to set up a kanban system to manage its supply of blood
with the regional blood bank. The regional blood bank delivers blood to the hospital
each day with a one day order lead time (an order placed by 6 p.m. today will be
delivered tomorrow afternoon). Internally, the hospital purchasing group places
orders for blood each day at 5 P.M. Blood is measured by the pint and is shipped in
containers that contain six pints. For a particular blood type, the hospital uses an
average of 12 pints per day. Due to the critical nature of a blood shortage, the hospital
wants to carry a safety stock of two day’s expected supply. How many kanban card
sets should the hospital prepare? (5 marks)

7. Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a

small city during a single day when a total of 200,000 letters were delivered. What is
the DPMO in this situation? What you understand by Sigma ( σ )? What is the Six-
sigma defect rate? Discuss Six sigma ( 6σ ) methodology. Name the analytical tools
used for Six-Sigma and Continuous Improvement. (3+ 2 + 1+5+ + 4 marks)

8. Nancy’s Auto Seat Cover and Paint Shop is bidding on a contract to do all the
custom work for Smiling Ed’s used car dealership. One of the main requirements in
obtaining this contract is rapid delivery time, because Ed-for seasons we shall not go
into here-wants the cars face lifted and back on his lot in a hurry. Ed has said that if
Nancy can refit and repaint five cars that Ed has just received in 24 hours or less, the
contract will be hers. Following is the time (in hours) required in the refitting shop
and the paint shop for each of the five cars. Assuming that cars go through the
refitting operations before they are repainted, can Nancy meet the time requirements
and get the contract? (10 Marks)

CAR REFITTING TIME REPAINTING TIME

(HOURS) (HOURS)
A 6 3
B 0 4
C 5 2
D 8 6
E 2 1