PRODUCTION SYSTEMS EXAM 1

SECOND SEMESTER 2015-2016

I. TRUE OR FALSE. Write TRUE if the sentence is true. Otherwise, write the answer to replace the
underlined word or phrase to make the statement correct. If there is no underlined word, simply
write FALSE if the statement is false.
1. Forecasts are more accurate for groups than individuals TRUE
2. Time series models analyze historical data to reveal relationships between
observable quantities and forecast quantities. FALSE
3. Forecast accuracy increases as time horizon for forecast increases. FALSE
4. Bottlenecks are processes which are holding up other production operations, or
lengthy operations that consume a great deal of time. TRUE
5. A value adding activity is an activity that changes the size, shape, fit, form, or
function of material or information (for the first time) TRUE
6. A nave forecast for September sales of the product would be equal to the forecast
for August FALSE
7. The larger the number of periods in the simple moving average forecasting method,
the greater the methods responsiveness to changes in demand FALSE
8. Qualitative forecast employ one or more mathematical models that rely on
historical data and/or causal variables to forecast demand QUANTITATIVE
9. Executive opinion is a forecasting technique based upon salespersons estimate of
expected sales SALES FORCE COMPOSITE
10. Design capacity is the theoretical maximum output of a system in a given period
under ideal conditions. TRUE
11. Fixed costs are those costs that continue even if no units are produced. TRUE
12. Efficiency is actual output as percent of design capacity. UTILIZATION
13. Productivity is more difficult to improve in the service sector TRUE
14. Flexibility refers to the ability to create new and unique goods and services that
delight customers and create competitive advantage INNOVATION
15. Quality measures the degree to which the output of a process meets customer
requirements. TRUE

1. Give three basic functions of organizations. EE, H,

HH
1. Give two major trends in business
today
A, E, JJ
2. The reason for existence of
organization
B
3. Plan for achieving organizational
goals
CC
4. The action taken to accomplish
strategies I
5. Acceptable product features BB
6. Long-term movement of data F
7. Short-term regular variations in data
DD
8. Wavelike variations of long-term C
9. Give two qualitative forecasting
method
LL, FF
10. Difference between actual and
predicted value II

IV. PROBLEM SOLVING.

1. Susan has a part-time "cottage industry" producing seasonal plywood yard ornaments for resale at
local craft fairs and bazaars. She currently works 8 hours per day to produce 16 ornaments. (a) What
is her productivity?; (b) She thinks that by redesigning the ornaments and switching from use of a
wood glue to a hot-glue gun she can increase her total production to 20 ornaments per day. What is
her new productivity? (c) What is her percentage increase in productivity?
2. The department manager using a combination of methods has forecast sales of toasters at a local
department store. Calculate the forecasts for APRIL TO AUGUST ONLY using the following
II. SERVICE vs MANUFACTURING
techniques: (a) Nave; (b) 3-month MA; (c) 3-month Weighted MA using (0.45, 0.35, 0.2); (d)
exponential smoothing using alpha = 0.35, with forecast for initial period = 60; which forecasting
Characteristic
Service
Manufacturing
method will you recommend? Use MAD and MSE to compute
A. Globalization
AA. Quality Control
for the forecast accuracy. Jan 52, Feb 61, Mar 73, Apr
1) Output (Tangible / Intangible)
INTANGIBLE
TANGIBLE
B. Mission
BB. Order Qualifier
79, May 66, June 47, July -47, and Aug 44. Present in
2) Customer Contact (Low / High)
HIGH
LOW
tabular form.
3) Uniformity of Input and Output (Low / High)
LOW
HIGH C. Cycles
CC. Strategy
3. A seasonal index for a monthly series is about to be calculated
4) Labor Content (Low / High)
HIGH
LOW
D. Research and
DD. Seasonality
on the basis of three years' accumulation of data. The three
5) Measurement of Productivity (Easy / Difficult)
DIFFICULT
EASY Development
previous July values were 120, 145, and 135. The average
E.
Agility
EE.
Operations/
3) Opportunity to correct Quality Problems (Easy /
EASY
DIFFICULT
Production
over all months is 190. The approximate seasonal index for
Difficult)
F. Trend
July is ________________.
FF. Executive opinion
4. The Academic Computing Center has five trainers available in
GG. Exponential
G. Order Winner
its computer labs to provide training sessions to students.
Smoothing
Assume that the capacity of the system is 2000 students per
III. MATCHING TYPE. Write the CAPITAL letter/s of the corresponding answers. Write
H. Finance / Accounting
HH. Marketing
XX if there is no correct answer from the choices on the right table
I. Tactics
II. Forecast Error
J. Maintenance

JJ. Kaizen

K. Regular Variations

KK. Irregular Variations

L. Nave method

LL. Consumer Surveys

5.

semester and the utilization is 90%. If the number of students who actually got their orientation
session is 1600, what is the efficiency of the system?
Big John's Manufacturing currently produces its lead product on a machine that has a variable cost of
$0.32 per unit, and fixed costs of $75,000. Big John is considering purchasing a new machine that
will drop the variable cost to $.28 per unit, but has a fixed cost of $150,000. (a) What is the crossover
point between the two machines? (b) What will you recommend to Big John, if he expects to sell
1,500,000 units?
PROBLEM SOLVING ANSWER KEY
1.

a) Productivity = 16 / 8 = 2 ornaments / hr
b) New Prod = 20 / 8 = 2.5 ornaments / hr
c) % of increase = (2.5 2) / 2 = 25%

2.

Jan
Feb
Mar

SALE
S
52
61
73

Na
ve

Apr

79

73

May

66

79

Jun

47

66

Jul

47

47

Aug

44

47

3MA

62.0
0
71.0
0
72.6
7
64.0
0
53.3
3

3WM
A
0.2
0.35
0.45

ES
0.35
0.65
60

64.6

64.55

73.3

69.61

71.95

68.35

60.05

60.88

50.8

56.02

MSE

Na
ve

3MA

3WM
A

Apr

36

289

207.36

May

169

Jun

361

25
658.7
78

Jul

53.29
622.50
25
170.30
25

Aug

AVERAGE

120

115

190

Y1

145

Y2

135

MAD
Apr
May

Na
ve
6
13

Jun
Jul

19
0

Aug
AVERAGE

3
8.2

3MA
17
5
25.66
67
17
9.333
33
14.8

Y3
Seasona
l Index

3WM
A
14.4
7.3

ES
14.45
3.61

24.95
13.05

21.35
13.88

6.8
13.3

12.02
13.06

Current
Fx
Cost
Vr
Cost
@1.5

289
87.11
11
269.
778

75000
0.32
5

46.24
219.9
39

0.631
58
0.763
16
0.710
53
0.701
75

New
15000
0
0.28
570,

ES
208.80
25
13.032
1
455.82
25
192.65
44
144.48
04
202.9
584

55,000

1,8
COP
75,000
Since < COP, retain
current

000