AMA INTERNATIONAL UNIVERSITY

COLLEGE OF ADMINISTRATIVE & FINANCIAL SCIENCES

MBA- PROGRAM

Production and Operations Management

Second Trimester 2008/09
MBA 105

FINAL PERIOD ASSIGNMENT

Guidelines
 This assignment contributes 15% from the final grade.
 This assignment covers chapter 5, 5S, and 6S in the course text book.
 Due date for this assignment 23rd March 2008 for section MA – 24th March
for section MB and 21st March for section MC. If delayed marks will be
deducted.
 Answers of the assignment theoretical part can be found in the course text
book. "Operations management by Stevenson edition 8" or from understanding
lectures and discussions.
 Questions contains problem solving should be solved in details and show your
work.
 Your assignment should be neat and presentable.
 I WILL NOT ACCEPT ANY ASSIGNMENT AS SOFT COPY VIA EMAIL.
PROBLEM NO# 1 (20%)
The Goode and Cooke Company produce several models of frying pans. There is little
difference in the production time required for the various models; the plant is designed to
produce 160 frying pans per eight-hour shift, and there are two shifts per working day.
However, the plant does not operate for the full eight hours: the employees take two 15-
minute breaks in each shift, one in the first four hours and one in the second four hours; two
hours per week are devoted to cleaning the factory and performing maintenance on the
machines; one four-hour period every four weeks is devoted to the meeting of the quality
circle. The plant usually produces about 3,500 frying pans per four-week period. You may
ignore holidays in solving this problem. Answer the following questions by adjusting the data
.to a four-week time period
?What is the design capacity in frying pans a.
?What is the effective capacity in frying pans? As a percent b.
?What is the actual output c.
?What is the efficiency d.
?What is the utilization e.

PROBLEM NO# 2 (15%)

Owns Company manufacturer’s tennis racquets. The selling price per racquet average $320
and variable cost per racquet are $190. The sales volume in dollars which produces a net
.income of $403,000 is 3,104,000
?What is the total fixed cost .a
?What is the total variable cost .b
?What is the break even in units .c
?Compute the quantity of units above break even that reach the above net income .d
?What is the quantity sold if the net income is 15% of total sale .e

PROBLEM NO# 3 (20%)

Kenneth Brown is the principal owner of Brown oil Inc. After quitting his university
teaching job, Ken has been able to increase his annual salary by a factor over 100. At
the present time, Ken is forced to consider purchasing some more equipment for
Brown Oil because of competition. Ken is planning to purchase one of the three
equipment:
i. Sub 100: If there is a favorable market, he will realize a profit of $ 300,000
on one hand, if the market is unfavorable; ken will suffer a loss of $ 200,000.
ii. Oiler J: If there is a favorable market, he will realize a profit of $250,000 on
one hand, if the market is unfavorable, Ken will suffer a loss of $ 100,000
iii. Texan: If there is a favorable market, he will realize a profit of $ 75,000 on
one hand, if the market is unfavorable; Ken will suffer a loss of $ 18,000.
1) Construct a decision Table
2) Construct Decision Tree
3) Which Equipment you will recommend to Ken to purchase under the
following criterion:-
a) Optimistic
b) Pessimistic
c) Equally Likely
4) If the probability of Favorable market is 0.35 which equipment will
recommend to Ken based in Expected Monetary Value Criteria.
EXERCISE NO#4 (15%)
Fall has come, and the department manager of the Purple Pentagon Discount Store must
decide how many snow blowers to order for the winter season. He believes there is an
association between the weather and the demand for snow blowers: a winter with heavy snow
should produce a high demand, and a winter with light snow should produce a low demand.
However, if he guesses wrong and orders a large number of snow blowers when the weather
.turns out to have light snow, he will suffer a loss. Here is his payoff matrix
States of Nature
Heavy Medium Light
Alternatives snow snow snow
Large Order $5,000 $1,000 $(4,000)
Medium Order 2,000 3,000 (2,000)
Small Order 500 500 1,000
?Which alternative should be selected under the maximax criterion a.
?Which alternative should be selected under the maximin criterion b.
?Which alternative should be selected under the Laplace criterion c.
d. if the probability of heavy snow is 30% Medium snow is 50% what is the value
?of expected monetary value

EXERCISE NO#5 (15%)

A fabric firm has received an order for cloth specified to contain at least 45 pounds of
cotton and 25 pounds of silk. The cloth can be woven out of any suitable mix of two
yarns A and B. They contain the proportions of cotton and silk (by weight) as shown
in the following table:

Cotton Silk

A 30% 50%

B 60% 10%

Material A costs $3 per pound, and B costs $2 per pound. What quantities (pounds) of
A and B yarns should be used to minimize the cost of this order?

EXERCISE NO#6 (15%)

A toy workshop makes doll houses and rocking horses. The warehouse can store
materials for up to 800 doll houses and 600 rocking horses. The workshop only has
3800 hours per week available for assembling toys and 3300 hours per week for
painting toys. It takes 3 hours to assemble and 1 hour to paint each rocking horse. It
takes 4 hours to assemble and 4 hours to paint each doll house. If the profit for each
rocking horse is $15 and the profit for each doll house is $30, how many of each
should they make to maximize profits within the workshop limitations?