# Operations

Question # 1: Although all nine of the competitive priorities discussed in this chapter are relevant to a company’s success in the marketplace, explain why the company should not necessarily try to excel in all of them. What determines the choice of the competitive priorities that a company should emphasize for its key processes? Answer: Question # 2: Suds and Duds Laundry washed and pressed the following number of dress shirts per week Week| Work Crew| Total Hours| Shirts| 1| Sud and Dud| 24| 68| 2| Sud and Jud| 46| 130| 3| Sud, Dud & Jud| 62| 152| 4| Sud, Dud & Jud| 51| 125| | Dud and Jud| 45| 131| a Your Assignment Will Be Ready Handily! – check this http://www.streetarticles.com/about/adamdedeaux/829776  . Calculate the labour productivity ratio for each week b. Explain the labor productivity pattern exhibited by the data. Answer: Productivity is a basic measure of performance for economics, industries, firms and processes. Improving productivity is a major trend in operations management because all firms face pressures to improve their processes and supply chains so as to compete with their competitors. Productivity is the value of outputs (services and products) produced divided by the value of input resources (wages and cost of equipment).

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The labour productivity is given by, Labour Productivity=OutputLabour Hours As a manager, the thing we need to know is what the customer pays or simply by the number of units produced or customer served. The value of input can be judged by their cost or by the number of hours worked. For Week=1; Sud and Dud=No. of Shirts ProducedLabour Hours Sud and Dud=68 Shirts24 Hours Sud and Dud=2. 833 For Week=2; Sud and Jud=No. of Shirts ProducedLabour Hours Sud and Jud=130 Shirts46 Hours Sud and Dud=2. 83 For Week=3; Sud, Dud and Jud=No. of Shirts ProducedLabour Hours Sud, Dud and Jud=152 Shirts62 Hours

Sud, Dud and Jud=2. 452 For Week=4; Sud, Dud and Jud=No. of Shirts ProducedLabour Hours Sud, Dud and Jud=125 Shirts51 Hours Sud, Dud and Jud=2. 451 For Week=5; Dud and Jud=No. of Shirts ProducedLabour Hours Dud and Jud=131 Shirts45 Hours Dud and Jud=2. 911 From the above data, Question # 3: An interactive television service that costs \$10 per month to provide can be sold on the information highway for \$15 per client per month. If a service area includes a potential of 15,000 customers, what is the most a company could spend on annual fixed costs to acquire and maintain the equipment?

Answer: To evaluate an idea for a new service or product or to access the performance of an existing one, determining the volume of sales at which the service or product breaks even is useful. Break Even quantity is the volume at which total revenues equal total costs. It can also be used to compare processes by finding the volume at which two different processes have equal total costs. Break-even analysis is based on the assumption that all costs related to the production of a specific product or service can be divided into two categories i. e. variable costs and fixed costs.

The variable cost, ‘c’, is the portion of the total cost that varies directly with volume of output: costs per unit for materials, labor, and usually some fraction of overhead. If we let ‘Q’ equal the number of units produced and sold per year, total variable cost = cQ. The fixed cost, ‘F’, is the portion of the total cost that remains constant regardless of changes in levels of output: the annual cost of renting or buying new equipment and facilities (including depreciation, interest, taxes, and insurance), salaries, utilities, and portions of the sales or advertising budget.

Thus, the total cost of producing a good or service equals fixed costs plus variable costs times volume, or Total cost = F + cQ The variable cost per unit is assumed to be the same no matter how many units Q are sold, and thus total cost is linear. If we assume that all units produced are sold, total annual revenues equal revenue per unit sold, ‘p’, times the quantity sold, or Total revenue = pQ If we set total revenue equal to total cost, we get the break-even point as pQ = F + cQ (p – c)Q = F Q=Fp-c We can also find this break-even quantity graphically.

Because both costs and revenues are linear relationships, the break-even point is where the total revenue line crosses the total cost line. In this given problem, we have p = revenue per unit sold = \$15 per client per month * 12 = \$180 per client per year. Q = 15,000 customers c = variable cost = \$ 10 per month * 12 = \$120 per year Therefore, Q=Fp-c 15,000=F180-120 F= \$900,000 annual fixed cost Question # 4: Analyze the decision tree in Figure A. 8. What is the expected payoff for the best alternative? First, be sure to infer the missing probabilities.

Answer: Analysis of the decision tree begins with calculations of the expected payoffs from right to left. However, in this problem there are some of the probabilities are missing. We know that the total probability in a decision tree should be 1. Over here, we have three decision points. For the third decision point, we half to select either between \$25, whose probability is 1or there is an event mode where we have to select between \$30 whose probability is 0. 4 and \$20 whose probability is 0. 6 because the remaining ratio left for 1 is 0. . Therefore, [0. 4(30)+0. 6(20)] = [12+12] = [24] So by having this value, we can now compare it with \$25 and \$24 and can make a decision at decision point 3. So we have selected \$25. Now there is another event node between \$25 whose probability is 0. 2 and \$26, probability is 0. 5 and \$20, probability is 0. 3. But before we have to calculate for second option for event node i. e. \$26 and \$20. Therefore, [0. 5(26)+0. 3(20)] = [13+6] = [19] Now, at event node 2 we have \$25 whose probability is 0. 2 and \$19 whose probability will be 0. . Therefore, [0. 2(25)+0. 8(19)] = [5+15. 2] = [20. 2] Therefore, at Alternative 2 we have \$20. 2. Event Node 3, [0. 4(20)+0. 3(18)+0. 3(30)] = [8+5. 4+7. 2] = [20. 6] Event Node 4, [0. 5(15)+0. 5(30)] = [7. 5 + 15] = [22. 5] Therefore, at decision point 2, we will have \$22. 5 and we left \$20. 6. Also, the amount at Alternative 1 will be \$22. 5. Hence when we decide between alternative 1 or alternative 2, our answer will be Alternative1. Question # 5: A white good appliance producer is planning to initiate a new product.

The operations manager must decide whether to purchase the one specific part of the product from a supplier at \$ 7 for each or produce the part in house. The manager has two alternative processes to be used for in –house production. The first process would have an annual fixed cost of \$160,000 and a variable cost of \$5 per unit. The second process would have an annual fixed cost of \$190,000 and a variable cost of \$4 per unit. Please create options showing the range of yearly quantities and indicating which option (Supplier, Process 1 or Process 2) should be selected for each range of quantities Question # 6:

A company plans to enter a new market with a brand new product and wants to establish a a new plant for the product, Due to highly expensive investment cost for the new plant a group of managers suggested that a pilot study should be done on the market to make sure demand is sufficient for the new product. The pilot study would cost around \$10,000 and the managers are aware of the fact that it can be successful or unsuccessful. The decision will be based on a large plant, small plant and no plant at all. With a favourable market the company anticipate to make \$90,000 from the large plant or \$60,000 from the small plant.

However if the market is unfavourable the managers anticipate that the company would lose \$30,000 with the large plant and the company would lose \$20,000 with the small plant. The manager estimates that probability of a favourable market given a successful pilot study is 0. 80. The probability of an unfavourable market given an unsuccessful pilot study is estimated to be 0. 90. The manager feels that there is 50-50 chance that the pilot study will be successful. They also know that they can always bypass the pilot study and simply make the decision as to whether to build a large plant, small plant or no plant at all.

Without doing any testing in a pilot study they estimate that probability of a successful market is 0. 60. Please make a suggestion to the managers. Question # 7: Paul O’Neill, former u. s treasury secretary, estimates that arguably half of the \$2 trillion a year that Americans spend on health care is needlessly wasted. Brainstorm up to 10 blue-sky ideas to solve the following problems a. A typical retail pharmacy spends 20% of its time playing telephone tag with doctors trying to find out what the intent was for a given prescription. b.

After the person responsible for filling the prescription determines what they think they are supposed to do, errors can be made even in filling the prescription. For example administering an adult dose (rather than the dose for a premature baby) of heparin in a preemie ICU is fatal. c. Drugs get distributed at a hospital on a batch basis. For example, carts can be filled on Monday, Wednesday and Friday. Ahuge volume of drugs can come back on Monday because they are not consumed on the wards between Friday and Monday, patients conditions changed or the doctor decided on a different intervention.

A technician spends rest of the day restocking the shelves with the returns and 40% of the intravenous materials prepared on Friday morning are poured down the drain. d. Sometimes the administration of the drug was not done on the agreed schedule, because the nurses were busy doing something else. e. For every bed in an acure care hospital system, someone falls during the year. Most falls occur after 11. 00PM and before 6. 00AM, Sometimes a bone is fractured leading to immobilization and then pneumonia. f. One in every 14 people who goes to U. S medical care system gets an infection they did not bring with them. Question # 8:

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