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##### EMBA 638 Operations Management Summer 2014 Final Exam

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Question;This exam is open book, open Blackboard and open notes. You may use Excel as needed or a calculator.You are not allowed to use other persons help or material from Internet (with the exception of Blackboard)in taking the exam.You have until Sunday August 25th, 2013 midnight EST to finish this exam.Show your work on the word document. This will allow you to obtain partial credit for your work even ifthe final answer is not correct.Your interpretation of a question, if any, is part of the exam. Only clarification questions will be answered.PartIIIIIIVVTopicQuality ControlInventory ManagementProcess Analysis and QueuingShort Answer QuestionsMultiple Choice, T/F QuestionsTotalValue1111351825100Grade* 2 = ____/200The Honor Pledge:On my honor, I have neither given nor received unauthorized aid on this exam.__________ _________________Student Signature (type your name)GOOD LUCK!1Part I Quality Control (11 points)1. Southwest keeps gate time of its planes at a minimum in order to maximize the flying time, hencecapacity utilization of its planes. They want to achieve a turnaround time of 20 minutes on average witha maximum of 25 minutes and a minimum of 15 minutes. (Although faster would be fine with them, theFAA and passengers might think they are cutting corners and not doing everything correctly).At the Baltimore airport (BWI), 3 gates a day were sampled over four days to determine how theSouthwest ground crew at BWI was doing on this standard. The average of the process was 20.5 minutesand the standard deviation was 1.5 minutes.a. (2 points) Fill in the following table.XUSLLSL20 minutes25 minutes15 minutesb. (5 points) Is the process centered and capable? Why or why not?Yes, the process is centered and capable.Why? Our Cpk value is 1.00. A Cpk of 1.00 is needed to make a process centered and capable.Process capability Ratio Cp= (USL-LSL) / 6Cp = (25-15)/(6*1.5)= 1.1111Process capability Index Cpk = Min [(x-LSL)/3, (USL-x)/3]=Min [(20.5-15)/(3*1.5), (25-20.5)/(3*1.5)] =Min (1.2222, 1.0000)=1.00002c.(4 points) What is the probability that a plane will have a turnaround time of greater than 25minutes?P(x>25 minutes)=P(z>(25 minutes 20.5 minutes)/1.5 minutes)=P(z>3)= 0.001353Part II: Inventory Management (11 points)2. Southside restaurant uses a fixed quantity (continuous replenishment) system. Daily demand for bags of coffee isnormally distributed with a mean of 36 and standard deviation of 8. The lead time is constant at 5 days. Themanagement wants to have a 92 percent service level and the restaurant is open 365 days per year. Holding costs are$0.50 per year and the ordering costs are $2.5 per order..a.(3 points) Determine the order quantity at which the total inventory costs would be minimized?b.(4 points) What is the reorder point and the time between orders?c.(4 points) Illustrate the order quantity, re-order point, safety stock and lead time on a diagram where the Yaxis represents the number of coffee bags and the x-axis represents the time? What is the maximum possibleinventory in the system at any point of time?Part V Multiple Choice and True/False (25 points)Multiple choice (16 points, 2 points each): Please highlight (in yellow) the correct answer.1. Animal shelters tend to order Sodium Barbipentathol in large batches (e.g., enough to last 6 months ormore). Smaller quantities would be ordered (e.g., a couple of weeks worth) except governmentregulations require extensive and detailed paperwork to be submitted with each order. This example ismost closely related to the following managerial insight:a.b.the order quantity increases as the cost per order increasesc.the order quantity increases as the shortage cost rate decreasesd.2.the order quantity increases as the holding cost rate decreasesthe order quantity increases as the trade balance decreasesWhich one of the following does not exemplify JIT/Lean used for competitive advantage?a. Acme Foods decides to decrease the number of its suppliers to just a few.b. Cajun Contractors has reduced the amount of space for inventory.c. Cheramie Trucking trains workers to specialize and become very efficient in one job.d. Ardoyne Builders has a scheduled preventive maintenance program.e. Ajax, Inc. is proud to announce that incoming goods are delivered directly to the point of use.3. A tennis ball manufacturer has identified several causes of variability in the bounce and has collecteddata on the number of times those causes have led to high variability over the past month. They nowneed to decide which causes to try to eliminate first. Which tool should they use?a. 5Sb. Pareto diagramc. ABC Analysisd. R-charte. PDCA4. Which of the following offers a potential for reducing inventory costs in a supply chain?a. sharing POS data across the supply chainb. sharing components across different productsc. having more warehousesd. a and be. a and cf. b and c5. Another term for a postponement strategy isa.Speculationb.delayed differentiationc.mass customization11d.decreased differentiatione.None of the above6. Which of the following phrases describes the chart below about the reasons for unsatisfying hotel stays?a. H is the most important problemb. 80% of the reasons cause 20% of the dissatisfaction.c. A is the most important problemd. 20% of the reasons cause 60% of the dissatisfactione. None of the above.7. Which of the following statements is not a characteristic of pull supply chains?a. Inventory levels are typically lowb. Ordering decisions are based on long-term forecastsc. Firms respond to specific customer ordersd. Allows faster response to changing markets8. If a production process is in statistical control, which of the following statements is incorrecta. There are no special causes of variation in the processb. The process will always be capable of meeting the customer specificationsc. There are common causes of variation in the processd. The range of the process is in statistical control12True/False (1 point each, 9 points)1. ___True_____ Variation in production systems that is caused by factors that can be clearly identifiedand possibly even managed is called assignable variation.2. __False______ EOQ balances purchase cost and ordering cost.The balance inventory order costs and carrying costs.3. __True__ Your suppliers supplier is a third tier supplier.4. ___False___ Under the assumptions of the Basic EOQ model, if one increases the order quantity, thenthe length of the order cycle decreases (with demand and cost parameters remaining the same).5. __False_ A high-end, customized furniture manufacturer, would most likely employ an assembly-linetype of process.6.___True_____ Productivity is the total value of outputs produced divided by the total value of all inputs to thetransformation process.7. __False___ Under constant lead time, the key drivers of safety stock are lead time, standard deviationof demand, and the safety factor (or service level).8. ____False_____ The idea behind Pareto charts is that working with the majority of possible causes isneeded to significantly improve quality.9. ___True__ Under the assumptions of EOQ model, if the total optimal cost (fixed ordering cost + holdingcost) is $10,000, then the holding cost part is $5,000.Thats the end! You have now completed the challenge of learning many of the concepts, tools and techniquesthat are employed in Operations Management, clearly a very important part of businesses today.Congratulations!!!!!I have enjoyed being your instructor over the summer and I wish you well in your professional careers. I hopeyou will be able to apply some these techniques and concepts. Grades will be available on Blackboard. Pleaseemail me with any questions or clarifications about the grading.

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