MIS 373: Basic Operations Management

FINAL EXAM STUDY GUIDE

MIS 373: Basic Operations Management 2

CH 1: INTRODUCTION

1. Define the terms operations management and supply chain2. Identify the three major functional areas of organizations and

describe how they interrelated3. Identify similarities and differences between production and service

operations4. Explain the key aspects of operations management decision making5. Explain the need to manage the supply chain

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CH2: COMPETITIVENESS, STRATEGY, AND PRODUCTIVITY

1. List several ways that business organizations compete.2. Discuss and compare organization strategy and operations strategy

and explain why it is important to link the two.3. Define the term productivity and explain why it is important to

organizations and to countries.4. Describe several factors that affect productivity.

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CH2: COMPETITIVENESS, STRATEGY, AND PRODUCTIVITY

• PSA#1 Q1: multifactor productivity• Similar exercise: textbook problem 9

• A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $25 per hour per employee. Each employee identifies an average of 3,000 potential leads a week from a list of 5,000. An average of 4 percent actually sign up for the service, paying a one-time fee of $70. Material costs are $1,000 per week, and overhead costs are $9,000 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.

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CH 5: STRATEGIC CAPACITY PLANNING

1. Name the three key questions in capacity planning2. Explain the importance of capacity planning3. Describe ways of defining and measuring capacity4. Name several determinants of effective capacity5. Perform cost-volume analysis

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CH 5: STRATEGIC CAPACITY PLANNING

• PSA#2 Q1: utilization and efficiency• Similar exercise: textbook problem 2

• In a job shop, effective capacity is only 50 percent of design capacity, and actual output is 80 percent of effective output. What design capacity would be needed to achieve an actual output of eight jobs per week?

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CH 5: STRATEGIC CAPACITY PLANNING

• PSA#2 Q2: cost-volume analysis• Similar exercise: textbook problem 4

• A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $40,000 for A and $30,000 for B; variable costs per unit would be $10 for A and $11 for B; and revenue per unit would be $15.

a. Determine each alternative's break-even point in units.b. At what volume of output would the two alternatives yield the same profit?c. If expected annual demand is 12,000 units, which alternative would yield the higher profit?

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CH 6: PROCESS SELECTION AND FACILITY LAYOUT

1. Compare the four basic processing types2. Describe product layouts and their main advantages and

disadvantages3. Describe process layouts and their main advantages and

disadvantages4. Develop simple product layouts5. Develop simple process layouts

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CH 6: PROCESS SELECTION AND FACILITY LAYOUT

• PSA#1 Q2: product layout• Similar exercise: textbook problem 4

• A producer of inkjet printers is planning to add a new line of printers, and you have been asked to balance the process, given the following task times and precedence relationships. Assume that cycle time is to be the minimum possible.

a. Do each of the following:(1) Draw the precedence diagram.(2) Assign tasks to stations in order of most following tasks. Tiebreaker: greatest positional weight.(3) Determine the percentage of idle time.(4) Compute the rate of output in printers per day that could be expected for this line assuming a 420-minute working day.

b. Answer these questions:(1) What is the shortest cycle time that will permit use of only two workstations? Is this cycle time feasible? Identify the tasks you would assign to each station.(2) Determine the percentage of idle time that would result if two stations were used.(3) What is the daily output under this arrangement?(4) Determine the output rate that would be associated with the maximum cycle time.

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CH 6: PROCESS SELECTION AND FACILITY LAYOUT

• PSA#1 Q3: process layout• Similar exercise: textbook problem 11• Using the information in the following grid, determine if the

department locations shown are appropriate. If not, modify the assignments so that the conditions are satisfied.

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CH 9: MANAGEMENT OF QUALITY

1. Define the term quality as it relates to products and as it relates to services.

2. Identify the determinants of quality.3. Explain why quality is important and the consequences of poor

quality.4. Describe TQM.5. Describe and use various quality tools.

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CH 10: QUALITY CONTROL

1. Explain the need for quality control.2. List and briefly explain the elements of the control process.3. Explain Type I and Type II errors4. Explain how control charts are used to monitor a process and the

concepts that underlie their use.

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CH 10: QUALITY CONTROL

• PSA#3 Q1: statistical process control• Similar exercise: textbook problem 3• The time to replace vehicle wiper blades at a service center was

monitored using a mean and a range chart. Six samples of n = 20 observations were obtained and the sample means and ranges computed:

a. Determine upper and lower limits for mean and range charts.b. Is the process in control?

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CH 11: AGGREGATE PLANNING

1. Explain what aggregate planning is and how it is useful.2. Identify the variables decision makers have to work with in aggregate

planning.3. Describe some of the graphical and quantitative techniques planners

use.4. Prepare aggregate plans and compute their costs.5. Discuss aggregate planning in services.

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CH 12: MRP AND ERP

1. Describe the inputs, outputs, and nature of MRP processing.2. Explain bill of materials3. Explain time-phased product structure4. Describe differences between MRP and ERP

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CH 12: MRP AND ERP• PSA#2 Q3: bill of materials

• Similar exercise: textbook problem 3• The following table lists the components needed to assemble an end

item, lead times (in weeks), and quantities on hand. a. If 40 units of the end item are to be assembled, how many additional units of B are needed? (Hint: You don't need to develop an MRP plan.)b. An order for the end item is scheduled to be shipped at the start of week 8. What is the latest week that the order can be started and still be ready to ship on time? (Hint: You don't need to develop an MRP plan.)

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CH 13: INVENTORY MANAGEMENT

1. Define the term inventory2. List the different types of inventory3. Describe the main functions of inventory4. Discuss the main requirements for effective inventory management5. Describe the A-B-C approach and explain how it is useful6. Describe the basic EOQ model and its assumptions and solve typical

problems.7. Describe reorder point models and solve typical problems.8. Describe situations in which the fixed-order interval model is

appropriate, and solve typical problems.9. Describe service level and risk of stockout and use Z table to identify

the z value for a service level or a risk of stockout

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CH 13: INVENTORY MANAGEMENT

• PSA#4 Q1: EOQ• Similar exercise: textbook problem 4• A large law firm uses an average of 40 boxes of copier paper a day.

The firm operates 260 days a year. Storage and handling costs for the paper are $30 a year per box, and it costs approximately $60 to order and receive a shipment of paper.

a. What order size would minimize the sum of annual ordering and carrying costs?b. Compute the total annual cost using your order size from part a.c. Except for rounding, are annual ordering and carrying costs always equal at the EOQ?d. The office manager is currently using an order size of 200 boxes. The partners of the firm expect the office to be managed “in a cost-efficient manner.” Would you recommend that the office manager use the optimal order size instead of 200 boxes? Justify your answer.

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CH 13: INVENTORY MANAGEMENT

• PSA#4 Q2: ROP• Similar exercise: textbook problem 20• Given this information:

Lead-time demand = 600 poundsStandard deviation of lead time demand = 52 pounds (Assume normality.)Acceptable stockout risk during lead time = 4 percent

a. What amount of safety stock is appropriate?b. When should this item be reordered?c. What risk of stockout would result from a decision not to have any safety stock?

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CH 13: INVENTORY MANAGEMENT• PSA#4 Q3: fixed-interval model

• Similar exercise: textbook problem 32• A manager must set up inventory ordering systems for two new

production items, P34 and P35. P34 can be ordered at any time, but P35 can be ordered only once every four weeks. The company operates 50 weeks a year, and the weekly usage rates for both items are normally distributed. The manager has gathered the following information about the items:

a. When should the manager reorder each item?b. Compute the order quantity for P34.c. Compute the order quantity for P35 if 110 units are on hand at the time the order is placed.

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CH 14: JIT & LEAN OPERATIONS

1. Explain the terms lean operations and JIT.2. Describe the main characteristics of lean systems.3. List some of the benefits and some of the risks of lean operation.4. List the three goals of a lean system and explain the importance of

each.

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CH 15: SUPPLY CHAIN MANAGEMENT

1. Explain the terms supply chain and logistics2. Discuss the importance of supply chain management3. Describe what bullwhip effect is4. Explain the causes and remedies for the bullwhip effect

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CH 17: PROJECT MANAGEMENT

1. Describe the project management constraints2. Describe the project life cycle3. Give a general description of the critical path method4. Construct simple network diagrams5. Describe the time-cost trade-offs6. Explain “crashing” activities7. Use the “crashing” procedure to shorten activity duration

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CH 17: PROJECT MANAGEMENT• PSA#3 Q2: network diagrams and critical path

• Similar exercise: textbook problem 2• Chris received new word processing software for her birthday. She

also received a check, with which she intends to purchase a new computer. Chris's college instructor assigned a paper due next week. Chris decided that she will prepare the paper on the new computer. She made a list of the activities she will need to do and their estimated times.

a. Arrange the activities into two logical sequences.b. Construct an AOA and an AON network diagram.c. Determine the critical path and the expected duration time.d. What are some possible reasons for the project to take longer than the expected duration?

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CH 17: PROJECT MANAGEMENT• PSA#3 Q4: crashing

• Similar exercise: textbook problem 16• Chuck's Custom Boats (CCB) builds luxury yachts to customer order.

CCB has landed a contract with a mysterious New York lawyer (Mr. T). Relevant data are shown on the next page. The complication is that Mr. T wants delivery in 32 weeks or he will impose a penalty of $375 for each week his yacht is late. Note: No activity can be crashed more than two weeks. Develop a crashing schedule.