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Production & Operations Management

October 2010

Quality Management
1. Explain the terms µQuality of Design¶ and µQuality of Conformance¶.

2. Use the dimensions of quality to describe typical characteristics of these products and
a. A television set
b. A restaurant meal (product)
c. A restaurant meal (service)
d. Painting a house

3. Compare the dimensions of product quality versus those of service quality.

4. What is ISO9000 and why is it important for global business to have ISO9000 certification?

5. Explain each of these methods:

a) The plan-do-study-act cycle
b) The 5W2H approach

6. What are the key elements of the TQM approach? What is the driving force behind TQM?

7. Briefly explain the terms µBenchmarking¶ and µRun charts¶.

8. Explain the costs associated with quality issues.

9. Explain in brief, the Six Sigma methodology in Total Quality Management.

10. Prepare a cause-and-effect diagram to analyze the possible causes of late delivery of parts
ordered from a supplier.

11. Prepare a scatter diagram for the following data set and analyze the relationship between the
Temp.(F) 65 63 72 66 82 58 75 86 77 65
Error rate 1 2 0 0 3 3 1 5 2 1

Quality Control

1. List the steps in Control process.

2. What is the purpose of a control chart? Explain the key concepts that underlie the
construction and interpretation of control charts.

3. Briefly explain the purpose of each of these control charts:

a) x-bar chart
b) Range chart
c) p-Chart
d) c-Chart

4. What is a run? How are run charts useful in process control?

5. Explain the terms µmedian run test¶ and µup/down run test¶. Why is it usually desirable to use
both of them?

6. Define and explain the terms control limits and process variability.

7. Answer the following questions about inspection:

a) What level of inspection is optimal?
b) What factors guide the decision of how much to inspect?
c) What are the main considerations in choosing between centralized inspection and on-site
d) What points are potential candidates for inspection?

8. What is meant by process capability index? How is it determined?

9. Classify each of the following as either a Type 1 error or Type 2 error:

a) Putting an innocent person in jail
b) Releasing a guilty person from jail
c) Eating (on not eating) a cookie that fell on the floor
d) Not seeing a doctor as soon as possible after ingesting poison

10. Specifications for a part for a DVD player state that the part should weigh between 24 and 25
grams. The process that produces the parts yields a mean of 24.5 grams with a standard
deviation of 0.2 grams. The output follows normal distribution.
a) What percentage of parts will not meet the weight specs?
b) Within what values 95.44% of sample means of this process fall, if samples of n=16 are
taken and the process is in control (random)?
11. An automatic filling machine is used to fill 1-litre bottles of cola. The machine¶s output is
approximately normal with a mean of 1.0 litre and a standard deviation of 0.01 litre. Output is
monitored using means of samples of 25 observations.
a) Determine upper and lower control limits that will include roughly 97% of the sample
means when the process is in control.
b) Given these sample means: 1.005, 1.001, 0.998, 1.002, 0.995 and 0.999, is the process in

12. Given the following data for the number of defects per spool of cable, using three-sigma
limits, is the process in control?

Spool 1 2 3 4 5 6 7 8
9 10
Defects 2 3 1 0 1 3 2 0
2 1

Spool 11 12 13 14
Defects 3 1 2 0

13. Using samples of 200 credit card statements, an auditor found the following:
Sample 1 2 3 4
Statements 4 2 5 9
With errors

a. Determine the fraction defective in each sample

b. If the true fraction of defective for this process is unknown, what is your estimate of it?
c. What is your estimate of the mean and standard deviation of the sampling distribution of
fractions defective for this sample size?
d. What control limits would give an alpha risk of 0.03 for this process?
e. What alpha risk would control limits of 0.047 and 0.003 provide?
f. Using control limits of 0.047 and 0.003, is the process in control?
g. Suppose that the long term fraction defective of the process is known to be 2%. What are the
values of the mean and the standard deviation of the sampling distribution?
h. Construct a control chart for the process, assuming a fraction defective of 2%, using two-
sigma control limits. Is the process in control?

14. A production process consists of a three-step operation. The scrap rate is 10% for the first
step and 6% for the other two steps.
a. If the desired daily output is 450 units, how many units must be started to allow for the loss
due to scrap?
b. If the scrap rate for each step could be cut in half, how many units would this save in terms
of the scrap allowance?
c. If the scrap represents a cost of $10 per unit, how much is it costing the company per day for
the original scrap rate?

15. A teller window at a bank had the following service times (in minutes) for 20 randomly
selected customers:
V 2 3 4
4.5 4.6 4.5 4.7
4.2 4.5 4.6 4.6
4.2 4.4 4.4 4.8
4.3 4.7 4.4 4.5
4.3 4.3 4.6 4.9

a. Determine the mean of each sample

b. If the process parameters are unknown, estimate its mean and standard deviation
c. Estimate the mean and the standard deviation of the sampling distribution.
d. What would three-sigma control limits for the process be? What alpha risk would they
e. What alpha risk would control limits of 4.14 and 4.86 provide?
f. Using limits of 4.14 and 4.86, are any sample means beyond the control limits? If so, which
g. Construct control charts for means and ranges using table 10.3 in the book. Are any samples
beyond the control limits? If so, which ones?
h. Explain why control limits are different for means in parts d and g?
i. If the process has a known mean of 4.4 and a known standard deviation of 0.18, what would
three-sigma control limits be for a mean chart? Are any sample means beyond the control
limits? If so, which ones?

16. A process that produces computer chips has a mean of 0.03 defective chip and a standard
deviation of 0.003 chip. The allowable variation is from 0.03 to 0.05 defective.
a. Compute the capability ratio for the process.
b. Is the process capable?

17. As part of an insurance company¶s training program, participants learn how to conduct an
analysis of clients¶ insurability. The goal is to have participants achieve a time in the range of
30 to 45 minutes. Test results for three participants were as follows:
Name Mean Std. Deviation
Armand 38 min. 3 min
Jerry 37 min 2.5 min
Melissa 37.5 min 1.8 min

a. Which of the participants would you judge to be capable? Explain.

b. Can the value of Cpk exceed the value of Cp for a given participant? Explain.

18. The Good Chocolate Company makes a variety of chocolate candies, including a 12-ounce
chocolate bar (340 grams) and box of six 1-ounce chocolate bars (170 grams).
a. Specifications for the 12 ounce bar are 330 grams to 350 grams. What is the largest standard
deviation (in grams) that the machine that fills the bar molds can have and still be considered
if the average fill is 340 grams?
b. The machine that fills the bar molds for the 6-ounce bars has a standard deviation of 0.8
grams. The filling machine is set to deliver an average of 1.01 ounces per bar. Specifications
for the 6-bar box are 160 to 180 grams. Is the process capable? (Variance for the box = 6 x
bar variance)
c. What is the lowest setting in ounces for the filling machine that will provide capability in
terms of the 6-bar box?

£cceptance Sampling
1. What is the purpose of acceptance sampling? How does it differ from process control?

2. What is an Operating Characteristic Curve, and how is it useful in acceptance sampling?

3. An assembly operation for trigger mechanism of semiautomatic spray gun produces a small
percentage of defective mechanisms. Management must decide whether to continue the
current practice of 100% inspection or to replace defective mechanisms after final assembly
when all guns are inspected. Replacement at final assembly costs $30 each; inspection during
trigger assembly costs $12 per hour of labour and overhead. The inspection rate is one trigger
per minute.
a. Would 100% inspection during trigger assembly justified if there are (1) 4% defective? (2)
1% defective?
b. At what point would management be indifferent between 100% inspection of triggers and
only final inspection?

4. Random samples of n=20 circuit breakers are tested for damage caused during shipment in
each lot of 4000 received. Lots with more than one defective are pulled and subjected to
100% inspection.
a. Construct the OC cure for this sampling plan.
b. Construct the AOQ curve for this plan, assuming defectives found during 100% inspection
are replaced with good parts. What is the approximate AOQL?

Product and Service Design

1. What are the factors influencing design of products and services?

2. What is modular design? What are its main advantages and disadvantages?

3. What are some of the competitive advantages of concurrent engineering?

4. Explain the phases of µlife cycle¶ in the context of products and services.

5. What is reverse engineering? Do you think it is ethical?

6. Examine and compare the following pairs of products and services on the basis of factors
such as features, cost, convenience, ease of use, ease and/or cost of repair, and safety:

a. VCR players versus DVD players

b. Cell phones versus land lines
c. Wide screen versus traditional TV sets
d. Satellite TV versus cable TV

7. Explain the term ³Design for Manufacturing´ and briefly explain why it is important.

8. A manufacturer of programmable calculators is attempting to determine a reasonable free-

service period for a model it will introduce shortly. The manager of product testing has
indicated that the calculators have an expected life of 30 months. Assume product life can be
described by an exponential distribution.
a. If service contracts are offered for the expected life of the calculator, what percentage of
those sold would be expected to fail during the service period?
b. What service period would result in a failure rate of approximately 10%?

9. A television manufacturer has determined that its 19-inch colour TV picture tubes have a
mean service life that can be modeled by a normal distribution with mean of six years and a
standard deviation of 1.5 years.
a. What probability can you assign to service lives of at least (i) 5 years? (ii) 6 years? (iii) 7.5
b. If the manufacturer offers service contracts for four years on these picture tubes, what
percentage can be expected to fail from wear out during the service period?

V  Determine the availability for each of the following cases:

a  = 4 days, average repair time = 3 days
b  = 3 hours, average repair time = 6 hours

VV A machine can operate for an average of V weeks before it needs to be overhauled,
a process which takes two days he machine is operated 5 days a week
Compute the availability of this machine

Design of Work Systems

1. What is job Design and why is it important?

2. Compare the features of µjob enlargement¶ and µjob enrichment¶.

3. Explain the term µknowledge based pay system¶.

4. Some Japanese companies have a policy of rotating their managers among different functions
(e.g. Marketing, Finance, Operations). In contrast, American managers are more likely to
specialize in a certain area. Discuss the advantages and disadvantages of each approach.

5. How is method analysis linked to Productivity improvements?

6. What are the main uses of Time study information?

7. What are the advantages and disadvantages of:

a) Time based pay plans?
b) Incentive plans?

8. What is work sampling? How is it different from Time Study?

9. An analyst has timed a metal cutting operation for 50 cycles. The average time per cycle was
10.40 min and the standard deviation was 1.20 min for a worker with a performance rating of
125 percent. Assume an allowance of 16% of job time. Calculate the standard time for this
10. A job was timed for 60 cycles and had an average of 1.2 min/piece. The performance rating
was 95% and workday allowances are 10%. Determine Observed time, Normal time and
Standard time.

11. The data in the table below represent time study observations for a woodworking operation.
Observation (min per cycle)
Element Rating 1 2 3 4 5 6
1 110% 1.2 1.17 1.16 1.22 1.24 1.15
2 115% 0.83 0.87 0.78 0.82 0.85 1.32*
3 105% 0.58 0.53 0.52 0.59 0.60 0.54
* Unusual delay, disregard time
a) Determine the standard time for the operation, assuming an allowance of 15% of
job time.
b) How many observations would be needed to estimate the mean time for element
2 within
1% of its true value with a 95% confidence?
c) How many observations would be needed to estimate the mean time for element
2 within
0.01 min of its true value with 95% percent confidence?
12. A job in an insurance office involves telephone conversations with policyholders. The office
manager estimates that about half of the employee¶s time is spent on the telephone. How
many observations are needed in a work sampling study to estimate that time percentage to
within 6% and have a confidence of 98%?

üearning Curves
1. An aircraft company has an order to refurbish the interiors of 18 jet aircrafts. The work has a
learning curve percentage of 80. The industrial engineering department estimates that the first
plane will require 300 hours to refurbish. Estimate the amount of time needed to complete:
a. The fifth plane
b. The first five planes
c. All 18 planes

2. A contractor intends to bid on a job installing 30 airport security systems. Because this will
be a new line of work, he estimates a learning curve of 85%, based on time records of similar
jobs. He estimates that the first job will take his crew 8 days to install. How many days
should the contractor budget for:
a. The first 10 installations?
b. The second 10 installations?
c. The final 10 installations?

3. Students in a POM class have been assigned four similar assignments. One student noted
that it took her 50 minutes to complete the first problem. Assuming that the four problems are
similar and that a 70% learning curve is appropriate, how much time can the student plan to
spend solving the remaining problems?

1. Discuss the advantages and limitations of quantitative and qualitative techniques for

2. List the specific weaknesses of each of these approaches to developing a forecast:

a. Consumer surveys
b. Salesforce composite
c. Committee of managers or executives

3. Describe the Delphi technique of forecasting. What are its main benefits and weaknesses?

4. Compare the use of MAD and MSE in evaluating forecasts

5. Discuss the advantages of exponential smoothing over moving averages technique.

6. Choose the type of forecasting technique (survey, Delphi, averaging, seasonal naïve, trend or
association) that would be most appropriate for predicting:
a. Demand for Diwali Greeting Cards
b. Popularity of new television serial
c. Demand for vacations on the moon
d. The impact a price rise of 10% would have on sales on mango pickle
e. Demand for toothpaste in a particular supermarket

7. National Scan Inc. sells radio frequency inventory tags. Monthly sales for a seven-month
period were as follows:
Month Sales (µ000 units)
February 19
March 18
April 15
May 20
June 18
July 22
August 20

a. Plot the monthly data as a line graph

b. Forecast September sales volume using each of the following:
i. A linear trend equation
ii. A five-month moving average
iii. Exponential smoothing with a smoothing constant = 0.20, assuming March forecast of
iv. The naïve approach
v. A weighted average using 0.60 for August, 0.30 for July and 0.10 for June
c. Which method seems least appropriate? Why? (compare with part a)
d. What does use of the term 2 2 rather than   presume?

8. A dry cleaner uses exponential smoothing to forecast equipment usage at its main plant.
August usage was forecast to be 88% of capacity; actual usage was 89.6% of capacity. A
smoothing constant of 0.1 is used.
a. Prepare a forecast for September
b. Assuming actual September usage of 92%, prepare a forecast for October usage.

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10. A textbook publishing company has compiled data on total annual sales of its business texts
or the preceding 9 years.
Year 1 2 3 4 5 6 7 8 9
Sales 40.2 44.5 48.0 52.3 55.8 57.1 62.4 69.0 73.7
a. Using an appropriate model, forecast textbook sales for each of the next 5 years.
b. Prepare a control chart for the forecast errors using the original data. Use 2s limits.
c. Suppose actual sales for the next 5 years turn out as follows:
Year 10 11 12 13 14
Sales 77.2 82.1 87.8 90.6 98.9
Is the forecast performing adequately? Explain.

11. The prices of petrol and steel over a period of 6 months are given below:
Month Jan Feb Mar Apr May June July
Petrol ($/lit) 0.53 0.56 0.57 0.59 0.60 0.55 0.59

Month Apr May Jun July Aug Sept

Steel ($/ton) 706 738 805 817 781 760

Assuming that steel prices depend upon the fuel prices with a lag of 3 months, forecast the steel price
for October. (Hint ± use associative model)

üocation Planning & £nalysis

1. Compare the location decisions pertaining to manufacturing and non-manufacturing

2. What are the benefits and disadvantages of locating in foreign countries?

3. What trade-offs are involved in deciding to have a single large centrally located facility
instead of several smaller, dispersed facilities?

4. The owner of Genuine Subs Inc. hopes to expand the present operation by adding one new
outlet. She has studied three locations. Each would have the same labour and material cost
(food, serving containers, paper napkins etc.) of $1.76 per sandwich. Sandwiches sell for
$2.65 each in all locations. Rent and equipment cost per month would be $5000 for location
A, $5500 for location B, and $5800 for location C.
a. Determine the volume necessary at each location to realize a monthly profit of $10000.
b. If expected monthly sales at A, B, and C are 21000 sandwiches, 22000 sandwiches, and
23000 sandwiches respectively, which location would yield the greatest profits?

5. A manager has received an analysis of several cities being considered for a new office
complex. The data (10 points max.) are as follows:

åactor £ B C
Business services 9 5 5
Community services 7 6 7
Real estate cost 3 8 7
Construction cost 5 6 5
Cost of living 4 7 8
Taxes 5 5 4
Transportation 6 7 8

a. If the manager weighs the factors equally, what will be the composite score of each location?
b. If business services and construction costs are given weights that are double the weight of the
other factors, what will be the composite score of each location?

6. A company that handles hazardous waste wants to minimize the cost of shipments to a
disposal centre from 5 receiving stations it operates. Given the locations of the receiving
stations and the volumes to be shipped daily, determine the location of the disposal centre.
Location of Volume
Processing Tons per day
station (x,y)
10,5 26
4,1 9
4,7 25
2,6 30
8,7 40

1. What are the main decision areas of job-shop scheduling?

2. Explain the use of Gantt charts in scheduling.

3. Briefly describe each of these priority rules ± FCFS, SPT, EDD, S/O, Rush

4. What factors would you take into account in deciding whether or not to split a job?

5. Use the assignment method to determine the best way to assign workers to jobs, given the
following cost information. Compute the total cost for your assignment plan.

Worker A B C
1 5 8 6
2 6 7 9
3 4 5 3

6. Develop an assignment plan that will minimize processing costs, given the information
shown, and interpret your answer.
Job A B C
1 12 8 11
2 13 10 8
3 14 9 14
4 10 7 12

7. The following table contains information concerning four jobs that are awaiting processing
at a work centre.
Job Job time Due Date
(days) (days)
A 14 20
B 10 16
C 7 15
D 6 17
a. Sequence the jobs using FCFS, SPT, EDD and CR. Assume the list is by order of arrival.
b. For each of the methods in part a, determine (1) the average job flow time, (2) the average
tardiness, and (3) the average number of jobs at the work centre.
c. Is one method superior to the others? Explain.

8. A wholesale grocery distribution centre uses a two-step process to fill orders. Tomorrow¶s
work will consist of filling the seven orders shown. Determine the job sequence that will
minimize the time required to fill the orders.
Time in hours
Order Step 1 Step 2
A 1.20 1.40
B 0.90 1.30
C 2.00 0.80
D 1.70 1.50
E 1.60 1.80
F 2.20 1.75
G 1.30 1.40
9. The following table contains order-dependent setup times for three jobs. Which processing
sequence will minimize the total setup time?
Preceding job¶s setup time (hr.)
Preceding Setup A B C
Job time (hr.)
A 2.4 - 1.8 2.2
B 3.2 0.8 - 1.4
C 2.0 2.6 1.3 -
10. Given the information in the following table, determine the processing sequence that would
result using the Slack per Operation (S/O) rule.
Remain.proc. Due Remaining
Job time (days) Date No. of operations
a 5 8 2
b 6 5 4
c 9 10 4
d 7 12 3
e 8 10 2

11. Given this information on planned and actual inputs and outputs for a service centre,
determine the work backlog for each period. The beginning backlog is 12 hours of work. The
figures shown are standard hours of work.
Input 1 2 3 4 5
Planned 24 24 24 24 20
Actual 25 27 20 22 24

Output 1 2 3 4 5
Planned 24 24 24 24 23
Actual 24 22 23 24 24

12. Determine the minimum workers needed and a schedule for the following staffing
requirements, giving workers two consecutive days off per cycle (not including Sunday).
Day Mon Tue Wed Thu Fri Sat
Staff needed 3 4 2 3 4 5

13. The manager of a BPO service centre needs to appoint operators for the new
office. The average daily calls
received from customers is shown below:

Day Mon Tue Wed Thu Fri Sat Sunday

Daily calls 340 450 270 150 180 520 690

An operator can handle average 90 calls per day. Determine the minimum staff
needed for handling the above load, giving each operator two consecutive days off per cycle.

Project Management

1. What is a work breakdown structure, and how is it useful for project planning?

2. List the main advantages of PERT. List the main limitations.

3. Define each of these terms, and indicate how each is determined.
a. Expected activity time
b. Variance of an activity time
c. Standard deviation of a path¶s time

4. Determine the critical path and expected project duration for the following AON network
diagram. The activity duration is in weeks.

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5. Construct AOA and AON diagrams for the following cases. Note that each case requires the
use of dummy activity.
(1) Activity Predecessor (2) Activity Predecessor
A - J -
B - K -
C - L J
G C Q -
I F, G S Q
K D, E V R, S, T
End H, I, K T Q
End M, P, V, W

6. The project described in the following table has just begun. It is scheduled to be completed
in 11 weeks.
a. If you were the manager of this project, would you be concerned? Explain.
b. If there is a penalty of $5000 per week for each week the project is late, what is the
probability of incurring a penalty of at least $5000?

Activity Estimated Standard

Time (Weeks) Deviation (weeks)
1-2 4 0.70
2-4 6 0.90
1-3 3 0.62
3-4 9 1.90

7. 7. A construction project has indirect costs totaling $40000 per week. Major activities in the project and
their expected times are shown in this precedence diagram:

Crashing costs for each activity are given below:

Crashing cost (in $)
Activity First Second Third
Week week week
1-2 18 22 -
2-5 24 25 25
5-7 30 30 35
7-11 15 20 -
11-13 30 33 36
1-3 12 24 26
3-8 - - -
8-11 40 40 40
3-9 3 10 12
9-12 2 7 10
12-13 26 - -
1-4 10 15 25
4-6 8 13 -
6-10 5 12 -
10-12 14 15 -

a. Determine the optimum time-cost crashing plan.

b. Plot the total cost curve that describes the least expensive crashing schedule that will reduce
the project length by six weeks.

1. Given the accompanying network diagram, with times shown in days,

a. Determine the expected duration of the project.
b. Compute the probability that the project will take at least 18 days.

Supply Chain Management

1. What is a Supply chain? What are the elements of supply chain management?

2. What is a bullwhip effect and why does it occur? How can it be overcome?

3. What is meant by the term inventory velocity and why is it important? What is information
velocity, and why is it important?

4. What impact has e-business had on supply chain management?

5. Describe the functions of purchasing management.

6. Describe CPFR and RFID and their importance in supply chain management.

7. Compare the advantages and disadvantages of centralization versus decentralization in


8. A manager at Strateline Manufacturing must choose between two shipping alternatives: two-
day freight and five-day freight. Using five-day freight would cost $135 less than using two-
day freight. The primary consideration is holding cost, which is $10 per unit a year. Two
thousand items are to be shipped. Which alternative would you recommend? Explain.

9. Determine which shipping alternative would be most economical to ship 80 boxes of parts
when each box has a price of $200 and holding costs are 30% of price, given this shipping
information: overnight - $300, two-day - $260, six-day - $180.
10. There are two shipping agencies A and B. Both offer a two-day rate: A for $500 and B for $525. In
addition, A offers a three-day rate of $460 and a nine-day rate of $400. B offers a four-day rate of
$450 and a seven-day rate of $410. Annual holding costs are 35% of unit price. Three hundred boxes
are to be shipped and each box has a price of $140. Which shipping alternative would you
recommend? Explain.


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